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Report to the Republican Leader, U.S. Senate: 

United States Government Accountability Office:
GAO: 

July 2010: 

Recovery Act: 

Contracting Approaches and Oversight Used by Selected Federal Agencies 
and States: 

GAO-10-809: 

GAO Highlights: 

Highlights of GAO-10-809, a report to the Republican Leader, U.S. 
Senate. 

Why GAO Did This Study: 

The American Recovery and Reinvestment Act of 2009 (Recovery Act), 
estimated to cost $862 billion over 10 years, is intended to stimulate 
the economy and create jobs. The Recovery Act provides funds to 
federal agencies and states, which in turn may award contracts to 
private companies and other entities to carry out the purposes of the 
Recovery Act. Contracts using Recovery Act funds are required to be 
awarded competitively to the maximum extent practicable. 

GAO was asked to examine the use and oversight of noncompetitive 
Recovery Act contracts at the federal and state levels. GAO determined 
(1) the extent that federal contracts were awarded noncompetitively; 
(2) the reasons five selected federal agencies (the Departments of 
Defense, Energy, and Health and Human Services; the National 
Aeronautics and Space Administration; and the Small Business 
Administration (SBA)) awarded noncompetitive contracts; (3) the 
oversight these agencies and their inspectors general (IG) provide for 
Recovery Act contracts; and (4) the level of insight five selected 
states (California, Colorado, Florida, New York, and Texas) have into 
the use of noncompetitive Recovery Act contracts. 

What GAO Found: 

More than two-thirds of the $26 billion obligated for Recovery Act 
federal contract actions through May 2010 were on contracts that were 
in place before the enactment of the Recovery Act. Most of these 
contracts had been awarded competitively. For new federal Recovery Act 
contract actions, 89 percent of the dollars were obligated on competed 
actions, as shown in the figure. 

Figure: Recovery Act Obligations on Existing and New Federal Contract 
Actions as of May 12, 2010 (Dollars in Millions): 

[Refer to PDF for image: pie-chart and subchart] 

Contract obligations: 
Existing contracts: 68%; 
New contracts: 32%: 
- Competed: 89%; 
- Noncompeted: 11%. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

Most of the Recovery Act dollars obligated noncompetitively on new 
contract actions went to socially and economically disadvantaged small 
businesses under SBA’s 8(a) program. 

The goal of using Recovery Act funds quickly on high-priority projects 
drove the contracting approaches of the five federal agencies, 
particularly their use of existing contracts. Officials explained that 
whether an existing contract had been competed originally did not 
influence the decision to use a pre-existing contract because the 
level of competition had been established before Recovery Act funds 
were available. 

The selected federal agencies implemented additional review processes, 
internal reporting, and coordination efforts for the Recovery Act. 
Some IGs for these agencies focused initial Recovery Act oversight on 
areas the IGs considered to be higher risk than contracts, such as 
grant programs. The IG reviews to date have not focused specifically 
on contracting, including the use of noncompetitive awards to 8(a) 
program businesses. GAO’s recent reviews of the 8(a) program, however, 
have found that safeguards for ensuring that only eligible firms 
receive 8(a) contracts may not be working as intended. 

The five states varied on the type and amount of data routinely 
collected on noncompetitive Recovery Act contracts. GAO could not 
determine the full extent to which such contracts are being used. The 
states generally rely on their pre-Recovery Act contracting policies 
and procedures, which generally require competition. The states do not 
routinely provide state-level oversight of contracts awarded at the 
local level, where a portion of Recovery Act contracting occurs. 
Officials from the selected states’ audit organizations said that if 
they were to address Recovery Act contracting issues, it could be done 
through the annual Single Audit or other reviews of programs that 
involve Recovery Act funds. 

What GAO Recommends: 

GAO recommends that the five IGs assess the need to allocate audit 
resources to noncompetitive 8(a) Recovery Act contracts. The IGs 
concurred or had no comment. 

View [hyperlink, http://www.gao.gov/products/GAO-10-809] or key 
components. For more information, contact John Needham, 202-512-4841, 
NeedhamJK1@GAO.GOV. 

[End of section] 

Contents: 

Letter: 

Background: 

Federal Agencies Largely Used Existing Contracts and Awarded Most New 
Recovery Act Contracts Competitively: 

Selected Federal Agencies Focused On Expediency When Choosing 
Contracting Approaches for Recovery Act Programs: 

Federal Agencies Provided Varying Degrees of Additional Contract 
Oversight, While IGs Focused On Higher-Risk Areas: 

Selected States Vary In Their Level of Insight into Noncompetitive 
Recovery Act Contracts: 

Conclusions: 

Recommendation for Executive Action: 

Agency and State Comments and Our Evaluation: 

Appendix I: Federal Agencies' Obligations on Competitive and 
Noncompetitive Recovery Act Contract Actions as of May 2010: 

Appendix II: Key Recovery Act Programs, Spending, Contract File Review 
Observations, and Oversight for Selected Agencies: 

Appendix III: Objectives, Scope, and Methodology: 

Appendix IV: Comments from the Department of Defense Inspector General: 

Appendix V: Comments from the Department of Energy Inspector General: 

Appendix VI: Comments from the National Aeronautics and Space 
Administration Inspector General: 

Appendix VII: Comments from the Small Business Administration: 

Appendix VIII: Comments from the State of Florida: 

Appendix IX: Comments from the State of Texas: 

Appendix X: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Funds Provided to Selected Agencies' IGs under the Recovery 
Act: 

Table 2: DOD Recovery Act Funds Allocation: 

Table 3: Examples of Noncompetitive Recovery Act Contract Actions from 
the DOD USACE Sacramento Site Review: 

Table 4: DOE Recovery Act Funds Allocation: 

Table 5: Examples of Noncompetitive Contract Actions from the DOE 
Environmental Management Consolidated Business Center Site Review: 

Table 6: HHS Recovery Act Funds Allocation: 

Table 7: Examples of Noncompetitive Recovery Act Contract Details from 
the HHS NIH Site Review: 

Table 8: NASA Recovery Act Funds Allocation: 

Table 9: Examples of Noncompetitive Recovery Act Contract Details from 
the NASA JSC Site Review: 

Table 10: SBA Recovery Act Funds Allocation: 

Table 11: Examples of Noncompetitive Recovery Act Contract Details 
from the SBA Office of Business Operations Site Review: 

Figures: 

Figure 1: Recovery Act Obligations on Existing and New Federal 
Contract Actions as of May 12, 2010 (Dollars in Millions): 

Figure 2: Recovery Act Obligations by Fiscal Year Quarter: 

Figure 3: DOD Obligations of Recovery Act Funds through Contracts, by 
Fiscal Quarter: 

Figure 4: DOD Recovery Act Obligations on New and Existing Federal 
Contracts by Extent of Competition as of May 12, 2010 (Dollars in 
Millions): 

Figure 5: DOE Obligations of Recovery Act Funds through Contracts, by 
Fiscal Quarter: 

Figure 6: DOE Recovery Act Obligations on New and Existing Federal 
Contracts by Extent of Competition as of May 12, 2010 (Dollars in 
Millions): 

Figure 7: HHS Obligations of Recovery Act Funds through Contracts, by 
Fiscal Quarter: 

Figure 8: Percentage of HHS Obligations Competed and Types of 
Noncompetitive Actions as of May 12, 2010 (Dollars in Millions): 

Figure 9 : NASA Obligations of Recovery Act Funds through Contracts, 
by Fiscal Quarter: 

Figure 10: NASA Recovery Act Obligations Competed and Types of 
Noncompetitive Actions as of May 12, 2010 (Dollars in Millions): 

Figure 11: SBA Obligations of Recovery Act Funds through Contracts, by 
Fiscal Quarter: 

Figure 12: SBA Recovery Act Obligations Competed and Types of 
Noncompetitive Actions as of May 12, 2010 (Dollars in Millions): 

Abbreviations: 

DOD: Department of Defense: 

DOE: Department of Energy: 

FAR: Federal Acquisition Regulation: 

FPDS-NG: Federal Procurement Data System--Next Generation: 

HHS: Department of Health and Human Services: 

IDIQ: Indefinite Delivery/Indefinite Quantity: 

IG: Inspector General: 

JSC: Johnson Space Center: 

NASA: National Aeronautics and Space Administration: 

NIH: National Institutes of Health: 

OMB: Office of Management and Budget: 

ORAC: Office of Recovery Act Coordination: 

OSD: Office of the Secretary of Defense: 

SBA: Small Business Administration: 

USACE: U.S. Army Corps of Engineers: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

July 15, 2010: 

Honorable Mitch McConnell: 
Republican Leader United States Senate: 

Dear Senator McConnell: 

Congress enacted the American Recovery and Reinvestment Act of 2009 
(Recovery Act)[Footnote 1] to help stimulate the United States economy 
by providing an estimated $862 billion over 10 years through a variety 
of programs. A portion of those funds is being provided directly to 
federal agencies, which may award contracts and grants for their 
respective programs. Another portion of Recovery Act funds is being 
provided directly to the states, which in turn may award contracts or 
grants to businesses or local governments. As of May 2010, $26 billion 
of Recovery Act funds had been obligated on contracts awarded by 
federal agencies. The Recovery Act provides that to the maximum extent 
practicable, federal agencies' contracts should be awarded 
competitively with fixed prices. Federal agencies and their inspectors 
general (IG) were provided funding under the Recovery Act to audit the 
act's programs and projects, including grant and contract awards. 
States generally are expected to use competition to the extent 
practicable when awarding contracts using federal funds. The benefits 
of competition are well-established. It saves taxpayer money, helps 
improve contractor performance, and promotes accountability for 
results. 

You asked us to examine the use and oversight of noncompetitive 
contracts[Footnote 2] awarded under the Recovery Act at the federal 
and state levels. In response, we determined (1) the extent of 
Recovery Act funding obligated by federal agencies on contracts, and 
the extent to which these contracts were awarded noncompetitively, (2) 
the reasons selected federal agencies awarded noncompetitive Recovery 
Act contract actions, (3) the extent of oversight of Recovery Act 
contracting at selected federal agencies, and (4) state officials' 
level of insight into and oversight of the use of noncompetitive 
Recovery Act contracts within selected states. This report first 
addresses each of these objectives, and then provides additional data 
on federal Recovery Act contracting governmentwide in appendix I and 
more detailed information about the approaches taken by selected 
federal agencies in appendix II. 

To determine the extent to which contracts using Recovery Act funds 
are being awarded noncompetitively by federal agencies, we analyzed 
governmentwide data from the Federal Procurement Data System--Next 
Generation (FPDS-NG).[Footnote 3] We determined that the FPDS-NG data 
were sufficiently reliable for the purposes of this review by 
comparing the information for selected agencies with information from 
other sources, including agency contract data and information in 
contract files at selected locations.[Footnote 4] To determine the 
reasons that Recovery Act contracts are at times not competed, we 
selected five agencies at which we discussed the use of noncompetitive 
contracts and reviewed about 150 noncompetitive Recovery Act contract 
actions--new contracts as well as orders on and modifications to 
previously awarded contracts. We selected these agencies based on the 
number, value, and percentage of noncompetitive Recovery Act actions 
and obligations. Four agencies--the Departments of Defense (DOD), 
Energy (DOE), and Health and Human Services (HHS), and the National 
Aeronautics and Space Administration (NASA)--are the four agencies 
that obligated the most Recovery Act funds using noncompetitive 
contracts. The fifth agency--the Small Business Administration (SBA)--
had a relatively low amount of noncompetitive Recovery Act actions and 
obligations but provided an example of how a smaller agency carried 
out Recovery Act contract awards. At each agency, we reviewed all 
Recovery Act contract actions awarded noncompetitively at a particular 
contracting office, generally the one with the largest volume of 
noncompetitive actions, to identify the reason each action was not 
competed and the extent to which the reason was explained in the 
contract file. To determine the extent of Recovery Act contracting 
oversight provided by the selected federal agencies and their 
respective IGs, we interviewed agency officials, including IG staff, 
and reviewed their oversight plans and resulting reports. 

To determine the level of insight that state officials have into the 
use of noncompetitive Recovery Act contracts, we selected five states--
California, Colorado, Florida, New York, and Texas--based on the 
amount of Recovery Act funds reported as being awarded via contracts 
on www.Recovery.gov and our goal of providing information on a variety 
of geographic locations.[Footnote 5] For each state, we discussed with 
the appropriate state officials--including representatives from the 
governors' offices, state procurement offices, and audit organizations-
-the extent to which the state has awarded noncompetitive Recovery Act 
contracts, the reasons why the state did not use competition, and the 
level of oversight the state provides for these contracts. 
Additionally, we discussed these issues with representatives of the 
state agencies that manage the education and weatherization programs, 
to obtain further understanding of how state agencies award and 
oversee contracts. Because a large portion of the Recovery Act funds 
received by the states is in the form of grants, which are further 
distributed by the states to local governmental entities, we discussed 
the extent of oversight the state provided over contracts awarded by 
local governmental entities.[Footnote 6] We also attempted to identify 
a statewide data source or database for sampling and evaluating state- 
awarded contracts with respect to competition, but were unable to 
identify such a data source or database for any of the states in our 
review. As a result, we relied primarily on testimonial evidence 
provided by state officials. Details on our scope and methodology are 
contained in appendix III. 

We conducted this performance audit from February 2010 to July 2010, 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

The Recovery Act was enacted on February 17, 2009, to help stimulate 
the United States economy by creating new jobs, as well as saving 
existing ones, and investing in projects that will provide long-term 
economic benefits. The Recovery Act requires that the President and 
heads of the federal agencies manage and expend Recovery Act funds to 
achieve the act's purposes as quickly as possible and consistent with 
prudent management. In addition, the Recovery Act requires contracts 
funded under the act to be awarded as fixed-price contracts through 
the use of competitive procedures to the maximum extent possible. The 
Office of Management and Budget (OMB) issued guidance for implementing 
the Recovery Act and meeting "crucial accountability objectives" of 
the act, including, for example: timely awarding of Recovery Act 
funds; reporting on the use and public benefit of those funds; and 
ensuring that those funds are used for authorized purposes while 
mitigating the potential for fraud, waste, error, and abuse.[Footnote 
7] 

In addition to these objectives, OMB supplemental guidance also 
provides other goals that agencies are to consider when using Recovery 
Act funds.[Footnote 8] Among those goals are investing in efforts that 
will provide jobs and have long-term public benefits, promoting local 
hiring, providing maximum practicable opportunities for small 
businesses, and supporting disadvantaged businesses. The guidance also 
identifies activities agencies should consider to mitigate risks, 
including determining what contract award methods will allow 
recipients to commence expenditures and activities as quickly as 
possible; providing oversight for non-fixed-price contracts that may 
be riskier to the government; and reviewing internal procurement rules 
to promote competition to the maximum extent practicable. 

Federal agencies using Recovery Act funds on contracts must take a 
number of new steps related to the solicitation of offers and award of 
contracts. For instance, to enhance the transparency to the public, 
the Federal Acquisition Regulation (FAR) was amended to require 
federal agencies to publicize on www.fedbizopps.gov contract actions 
that will be funded by the Recovery Act. The description on the Web 
site of the supplies and services should be clear and unambiguous to 
support public understanding of the procurement. After awarding a 
contract using other than fixed-price or competitive approaches, 
federal agencies are also required to publicize the rationale for 
doing so on the Web site. In addition, federal agencies should use 
specific codes when entering Recovery Act contract actions into FPDS-
NG to indicate that Recovery Act funds are being used, in whole or in 
part. The FAR was also amended to implement the Recovery Act 
requirements that: only American-produced iron, steel, and 
manufactured goods be used in Recovery Act construction projects; 
access be provided for Comptroller General and IG audits and reviews 
of Recovery Act contracts and subcontracts; and whistleblower 
protections be provided. The act also requires the payment of at least 
locally prevailing wages to contractor employees working on Recovery 
Act projects, in accordance with the Davis-Bacon Act. 

Federal agencies are generally required to obtain full and open 
competition through competitive procedures when awarding government 
contracts, unless an exception to competition applies. Some authorized 
exceptions include when: 

* the supplies or services needed by the agency are available from 
only one responsible source and no other supplies or services will 
satisfy the agency's needs; 

* the agency's need for the supplies or services is of such an unusual 
and compelling urgency that there would be serious injury if the 
agency were not permitted to limit the number of sources; or: 

* a statute expressly authorizes that the acquisition be made through 
another agency or from a specified source, such as SBA's 8(a) program. 
[Footnote 9] 

In most cases, the use of noncompetitive contracting procedures must 
be properly justified in writing and certified by the appropriate 
agency official. The competition requirements that apply to federal 
agencies do not apply to the states, each of which has its own 
contract competition requirements. 

Additionally, purchases of supplies or services that are under certain 
dollar thresholds (usually from $3,000 to $100,000) may be acquired 
through the use of simplified acquisition procedures. These procedures 
provide a streamlined approach to procurements as a way to promote 
efficiency and economy in contracting. While full and open competition 
procedures do not apply to simplified acquisitions, federal agencies 
are still required to promote competition to the maximum extent 
practicable. When using simplified acquisition procedures, federal 
agencies can solicit from one source if they determine that only one 
source is reasonably available. 

Section 8(a) of the Small Business Act authorizes SBA to create a 
business development program to help small, socially and economically 
disadvantaged businesses compete in the American economy, including 
gaining access to the federal procurement market. This program, known 
as the 8(a) program, authorizes contracting by using procedures other 
than full and open competition, such as awarding sole-source 
contracts. Under the 8(a) program, when the anticipated value of a 
contract is below the "competitive threshold"--$5.5 million for 
acquisitions involving manufacturing and $3.5 million for all other 
acquisitions--the contract should be awarded on a sole-source basis to 
an eligible 8(a) business.[Footnote 10] Contracts above the 
competitive thresholds can be awarded based on competition limited 
only to 8(a) businesses when there is a reasonable expectation that at 
least two 8(a) businesses will submit offers. Sole-source contracts of 
any value may be awarded to businesses owned by an eligible Indian 
tribe or an Alaska Native Corporation. Federal agencies are not 
required to provide written justification for sole-source contracts 
awarded under the 8(a) program, but regulations specify percentages of 
the work that must be performed by the 8(a) business with its own 
resources. The OMB Recovery Act implementing guidance encourages 
federal agencies to take advantage of authorized small business 
contracting programs, which may include the use of noncompetitive 
contracts, to create opportunities for small businesses.[Footnote 11] 

The Recovery Act provided an unprecedented level of funding for 
programs to be administered within the states at various levels. 
Recovery Act funds are being distributed to states, local entities, 
and individuals through a combination of formula and competitive 
grants and direct assistance. Nearly half of the approximately $580 
billion associated with Recovery Act spending programs will flow to 
states and localities through about 50 state formula and discretionary 
grant programs as well as about 15 entitlement and other programs. 
Some of the funds are passed from the federal agencies through state 
governments to local governments, while other funds are provided 
directly to local governments or individuals by the federal agencies. 

As we previously reported, states are taking various approaches to 
ensure that internal controls are in place to manage risk up front, 
rather than after problems develop and deficiencies are identified. 
[Footnote 12] States have different capacities to manage and oversee 
the use of Recovery Act funds. Many of these differences result from 
the underlying differences in approaches to governance, organizational 
structures, and related systems and processes that are unique to each 
jurisdiction. To provide state-level oversight of the use of Recovery 
Act funds, many states appointed an individual or team, often in the 
governor's office, to provide overarching guidance and monitoring for 
the state's Recovery Act efforts. Since many of the programs and the 
processes and procedures used to implement them existed before the 
Recovery Act funds were provided, much of the focus of the state-level 
oversight efforts has been on the new aspects of the Recovery Act, 
such as the new recipient reporting requirements and state fiscal 
stabilization funds. 

Federal Agencies Largely Used Existing Contracts and Awarded Most New 
Recovery Act Contracts Competitively: 

More than two-thirds of the $26 billion that had been obligated on 
federal contracts through May 2010 was obligated on contracts that 
were already in place before the Recovery Act. Agencies used 
mechanisms such as task orders for services, delivery orders for 
supplies, and contract modifications to add work or funds to existing 
contracts. For these orders and modifications on existing contracts, 
the decisions to compete or not compete the underlying contracts 
predated the Recovery Act. About 89 percent of the Recovery Act funds 
obligated on pre-existing contracts were coded in FPDS-NG as being 
competed. 

Approximately one-third of Recovery Act federal contract obligations 
through May 2010 was obligated on new contracts. For these contracts, 
the decisions on whether to compete the contracts were made after the 
Recovery Act was enacted. As shown in figure 1, most Recovery Act 
dollars obligated on new federal contracts were on contracts that were 
competed. The new contracts that were not competed consisted of 
contracts awarded under the SBA's 8(a) program, contracts awarded 
using simplified acquisition procedures, and other contracts that were 
awarded under authorized exceptions to competition, such as only one 
source was available or the requirement was urgently needed. Almost 80 
percent of the approximately $875 million obligated to noncompetitive 
new contracts went to businesses under SBA's 8(a) program. 

Figure 1: Recovery Act Obligations on Existing and New Federal 
Contract Actions as of May 12, 2010 (Dollars in Millions): 

[Refer to PDF for image: pie-chart and subchart] 

Contract obligations: 
Existing contracts: 68%; 
New contracts: 32%: 
* Competed: 89%; 
* Noncompeted: 11%: 
- (a) program sole source: $686 million; 
- Other: $74 million; 
- Sole or unique source: $55 million; 
- Urgency: $45 million; 
- Simplified acquisition procedures: $15 million. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

Between both existing and new contracts, almost 90 percent of the $26 
billion in Recovery Act contracting dollars through May 2010 were 
obligated on competitive contract actions. See appendix I for detailed 
data on the obligations placed on Recovery Act contract actions by all 
federal agencies. 

Selected Federal Agencies Focused On Expediency When Choosing 
Contracting Approaches for Recovery Act Programs: 

Officials at the five federal agencies we reviewed told us that they 
chose their contracting approaches to meet their primary goals of 
obligating Recovery Act funds quickly and to high-priority projects, 
which sometimes led to using noncompetitive contract actions. The act 
and guidance from OMB and agency officials directed agencies to 
obligate Recovery Act funds quickly, creating a sense of urgency on 
the part of contracting staff. As a result, program and contracting 
staff identified programs, projects, and contract vehicles that would 
allow them to obligate funds within short time frames. Contracting 
officials at some of the agencies we visited told us that they 
considered both the relative risks of using noncompetitive contracting 
approaches and the benefits of obligating funds faster than had they 
awarded new contracts using full and open competition. For example, 
the U.S. Army Corps of Engineers (USACE) chose construction projects 
that could be executed quickly by issuing task orders under previously 
awarded contracts with businesses under SBA's 8(a) program. Further, 
contracting officials at USACE also noted that new sole-source 
contracts to 8(a) businesses typically take about 4 months to award, 
[Footnote 13] while a new competitive contract could take 12 to 14 
months using full and open competition procedures. As shown in figure 
2, most of the Recovery Act funds were obligated within the first two 
full fiscal quarters in which the funds were available for obligation. 

Figure 2: Recovery Act Obligations by Fiscal Year Quarter: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year quarter: Q3 FY09; 
Obligations of Recovery Act Funds through Contracts: $7.13 billion. 

Fiscal year quarter: Q4 FY09; 
Obligations of Recovery Act Funds through Contracts: $9.64 billion. 

Fiscal year quarter: Q1 FY10; 
Obligations of Recovery Act Funds through Contracts: $2.78 billion. 

Fiscal year quarter: Q2 FY10; 
Obligations of Recovery Act Funds through Contracts: $4.86 billion. 

Fiscal year quarter: Q3 FY10; 
Obligations of Recovery Act Funds through Contracts: $1.58 billion. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

Officials at several of the selected federal agencies explained that 
the use of existing contracts allowed them to obligate funds quickly. 
Whether an existing contract had been competed originally did not 
influence decisions about which of these contracts to use since the 
level of competition had already been established prior to the 
availability of Recovery Act funds. According to agency officials, 
programmatic priorities and the availability of contracts with the 
capacity to absorb and effectively use additional funding were the 
predominant factors in choosing which existing contracts received 
Recovery Act funds. Use of the 8(a) program to award new contracts 
allowed agencies to quickly obligate funds without competition as sole-
source awards. For certain 8(a) contracts, such as those below $3.5 
million, sole-source is the default contracting approach under federal 
regulations.[Footnote 14] Contracting officials at each of the federal 
agencies told us that the 8(a) program allowed them to quickly 
obligate funds on both new and existing contracts under $3.5 million 
and that the noncompetitive nature of the contracts was viewed as a 
trade-off for expediency and the ability to provide opportunities to 
small businesses. 

While speed was the primary driver agencies cited for using 
noncompetitive contracting approaches, noncompetitive awards were also 
used in a small number of new contracts that we reviewed when there 
was only one source available for specialized equipment or a specific 
service. For example, several National Institutes of Health (NIH) 
contract actions we reviewed were sole-source contracts for 
specialized medical equipment. In these cases, there was only one 
manufacturer that could meet the requirements of the contract 
according to the documentation in the contract files. 

At the five selected agencies, we found that all of the new 
noncompetitive Recovery Act contracts that required documented 
justification and approval for using other than full and open 
competition had such documentation. For most new noncompetitive 
Recovery Act contracts, specific documentation to justify the 
noncompetitive award was not required. However, we found that 21 of 
the new contracts awarded as of February 2010 at the five agencies we 
visited required documented justifications.[Footnote 15] For these 21 
contracts, the contract files included the required justification and 
approval documentation for not using full and open competition. Almost 
all of the justifications we reviewed authorized a sole-source 
contract because there was only one responsible source and no other 
type of supplies of services would satisfy the agency's requirements. 
Among these, about half were for purchases of proprietary parts or 
technology, and most of the others were contracts for utility services. 

Federal Agencies Provided Varying Degrees of Additional Contract 
Oversight, While IGs Focused On Higher-Risk Areas: 

The selected agencies added additional review processes, internal 
reporting, and coordination steps in response to the Recovery Act. 
While the measures implemented vary at each of the selected agencies, 
all have created additional processes to increase management oversight 
beyond their normal practices. IGs used a risk-based approach to 
target their initial oversight efforts, and did not specifically 
target noncompetitive contract actions because IGs did not view them 
as high risk. At most of the selected agencies, IGs chose to focus on 
areas and programs they judged to be higher risk, such as grant 
programs, which accounted for the majority of Recovery Act funding. 
Alongside IG's individual efforts, the Recovery Act also established 
the Recovery Accountability and Transparency Board to coordinate among 
the IGs and provide additional oversight.[Footnote 16] 

Selected Federal Agencies Implemented Varying Degrees of Additional 
Oversight for Contracts Awarded under the Recovery Act: 

The selected agencies used existing processes to award and administer 
Recovery Act contracts, but they also implemented a number of 
additional measures intended to provide enhanced oversight. This added 
oversight was in response to the specific requirements of the Recovery 
Act and implementing guidance from OMB for greater transparency, 
speedy execution of projects, maximizing competition in contracting, 
and other priorities.[Footnote 17] According to agency officials, 
additional oversight measures were put in place at the agencywide 
level, as well as within the agency components that we reviewed. 

All five of the selected agencies created working groups, committees, 
or other internal entities with the mission of coordinating each of 
the agency's Recovery Act work. Most of these groups deal with a wide 
range of Recovery Act-related implementation issues and included 
oversight of contracting as one element of their work. Generally, 
officials said that they meet on a regular basis--such as monthly or 
weekly--and provide a venue for officials from across the agencies to 
provide management visibility into Recovery Act programs, discuss 
problems that may have arisen, and coordinate approaches by issuing 
formal or informal guidance. For example, DOD created the Recovery Act 
Working Group to coordinate implementation across the department. At 
weekly meetings, representatives from the Office of the Secretary of 
Defense and the military services provide updates on the status of 
Recovery Act obligations, projects in progress, relevant IG findings, 
and other issues. Further, similar Recovery Act coordinating groups 
are in place within each of the military services. 

In addition to their primary Recovery Act coordination groups, some 
agencies also created additional subgroups to coordinate specific 
aspects of implementation and oversight, such as contracting. For 
example, HHS established an Office of Recovery Act Coordination to 
work across the entire agency. As part of that function, HHS 
established a Recovery Act Coordinators group to hold weekly meetings 
of key personnel from the various agency operating divisions, allowing 
centralized collection and distribution of management information. 

Most agencies reported that they also identified a single individual 
to take managerial responsibility for implementation and oversight of 
Recovery Act programs. For example, NASA created the Recovery Act 
Implementation Executive position responsible for coordinating 
activities throughout the agency related to the administration of 
Recovery Act programs. Likewise, at DOD, the Principal Deputy Under 
Secretary of Defense in the Comptroller's office leads the Recovery 
Act Working Group and is responsible for ensuring that the military 
services are properly administering their Recovery Act-funded programs. 

Although the selected agencies reported that they awarded Recovery Act 
contracts through their standard contracting processes, one agency 
implemented additional pre-award reviews of contract actions. 
According to NIH officials, NIH implemented an increased review of 
contracts awarded noncompetitively, which allowed greater visibility 
into Recovery Act contracts. Typically, NIH management reviews any 
noncompetitive contract award over $550,000, but NIH procedures for 
the Recovery Act require management review of all proposed 
noncompetitive contracts prior to award. Across the five federal 
agencies, some provided additional review in other ways, such as 
reviews of selected projects prior to the contract award process. See 
appendix II for additional details on each agency. 

Agencies increased the amount of internal reporting of Recovery Act 
activities, including contracting. In combination with the 
coordination groups discussed above, this internal reporting was 
intended to create greater visibility for Recovery Act programs. 
Agencies increased the amount of data provided directly to agency 
leadership on contract awards, as well as the frequency at which these 
data are updated. For example, DOE expanded an existing data system to 
provide more frequent reporting and performance information to a 
larger number of users as part of its approach to Recovery Act 
oversight. The system includes regularly updated financial, earned 
value management,[Footnote 18] performance, risk, and job creation 
data on DOE projects, which are available to agency officials directly 
and through daily summary reports. Within DOD, USACE established a 
weekly report to agency leadership on Recovery Act contracting 
activity, showing obligations, project status, and other information. 

The additional oversight processes and increased volume of funding 
under the Recovery Act have put added demands on agency contracting 
staff, which agency officials said was having some impact on their 
ability to carry out their missions. The Recovery Accountability and 
Transparency Board coordinated a survey administered by IGs of 
contracting and grant officials at 29 agencies regarding the adequacy 
of contracting and grant staffing levels.[Footnote 19] Some survey 
respondents said that staffing was inadequate, while about half of 
respondents said that staffing was adequate to meet Recovery Act needs 
but affected non-Recovery Act work. Contracting officials at several 
agencies whom we met with in our site reviews also reported that there 
had been an impact on their staff. Officials said that staff had put 
in extra hours to meet Recovery Act demands, and in one case said that 
attention to Recovery Act contracts had led to delays on non-Recovery 
Act contract awards. 

Most IGs for the Selected Agencies Did Not Focus on Contracts Because 
Other Areas Were Deemed Higher Risk: 

The Recovery Act provided supplemental funding to IGs to support their 
oversight of their agencies' spending under the act. Table 1 shows the 
funding provided to the IGs for the five selected agencies. 

Table 1: Funds Provided to Selected Agencies' IGs under the Recovery 
Act: 

IG Office: Department of Defense; 
Recovery Act funding received: $15.0 million; 
Recovery Act funding spent as of April 2010: $3.7 million. 

IG Office: Department of Energy; 
Recovery Act funding received: $15.0 million; 
Recovery Act funding spent as of April 2010: $1.3 million. 

IG Office: National Aeronautics and Space Administration; 
Recovery Act funding received: $2.0v; 
Recovery Act funding spent as of April 2010: $0.45 million. 

IG Office: Department of Health and Human Services; 
Recovery Act funding received: $17.0 million; 
Recovery Act funding spent as of April 2010: $4.53 million. 

IG Office: Small Business Administration; 
Recovery Act funding received: $10.0v; 
Recovery Act funding spent as of April 2010: $0.96 million. 

Source: GAO summary of data provided by the IGs of DOD, DOE, HHS, 
NASA, and SBA. 

[End of table] 

IGs for the selected agencies reported that they used assessments of 
the relative risks, specific to their agencies and programs, of 
different Recovery Act activities to target their oversight efforts. 
At three of the five IG offices, these assessments did not result in a 
focus on contracting. The IGs for all five agencies reported that they 
used a risk-based approach to structuring their Recovery Act oversight 
work, but each considered different factors in assessing risk. They 
all said that the amount of Recovery Act funding received by their 
agency was a main factor in their focusing on program areas or 
projects receiving the greatest funding. Most Recovery Act spending 
was through grants not contracts. Other risk factors used by some of 
the IGs included problems identified in previous audit work, the level 
of experience of grant recipients, and contract characteristics such 
as the level of competition and whether the contract was new or 
existing. At three of the IG offices, the assessment results showed 
that Recovery Act contracting was an area of lower risk relative to 
Recovery Act spending through grants and loans. These offices devoted 
only a small portion of their Recovery Act audit work toward it. For 
example, HHS IG officials said that they focused on the agency's grant 
programs, in large part because the amount of Recovery Act funding to 
be spent by HHS through grants was much greater than the amount to be 
spent through contracts.[Footnote 20] In addition, the HHS IG's prior 
findings showed grants to be a higher-risk area. The officials said 
that they also took into account the risks posed by increased funding 
under the Recovery Act. For example, an HHS IG official said that they 
anticipated that some grant recipients would have little prior 
experience with federal funds. As a result of this risk assessment, 
the HHS IG conducted only limited work on contracts. This work 
involved two reviews that looked at administrative approvals and 
funding for a selection of contracts at NIH, and concluded that no 
further reviews were needed. The IGs review their Recovery Act audit 
plans periodically, generally on a semiannual basis, and revise them 
as warranted. 

Contracting under the 8(a) program was not a focus for four of the 
five IGs, who did not use the 8(a) status of a business as a factor in 
their selection of contracts for review, and did not review 8(a) 
compliance issues, such as 8(a) eligibility or limits on the amount of 
work that can be subcontracted. The DOE IG and HHS IG did not review 
issues related to 8(a) contracts as a result of their risk 
assessments, because they did not identify contracting as a high-risk 
area. DOD IG and NASA IG officials said that they did not focus on 
issues related to 8(a) contracts beyond the 8(a) contracts they 
encountered in performing their programmatic reviews, and did not 
review 8(a) business compliance and eligibility. The eligibility 
determination is an issue that is within the sole purview of SBA. The 
SBA IG did review some 8(a) contracts and looked into the reasons 
specific businesses were chosen. In one of the SBA IG reviews, the 
resulting report did address the eligibility of two 8(a) businesses 
and determined that one of the two businesses was not eligible for the 
contract award under the 8(a) program rules.[Footnote 21] 

We recently reviewed the process SBA uses to ensure that 8(a) 
businesses remain eligible to continue participating in the program, 
and found inconsistencies and weaknesses in the required annual review 
procedures.[Footnote 22] For example, we estimated that SBA staff at 
five district offices failed to complete the required review for 55 
percent of 8(a) businesses. In a separate review, we recently found 
that $325 million in set-aside and sole-source contracts were awarded 
to businesses that were not eligible to participate in the program. 
[Footnote 23] We also have identified issues with respect to the use 
of 8(a) businesses that qualify as Alaska Native Corporations. 
[Footnote 24] Specifically, we have found that agencies have not 
always complied with requirements to notify SBA when 8(a) contracts 
with Alaska Native Corporations are modified, or to ensure that the 
businesses comply with limits on subcontracting. 

In contrast to the other three IGs, the DOD IG and NASA IG included 
reviews of individual contracts as a central part of their oversight. 
According to DOD IG officials, they chose their approach as a result 
of their risk analysis. The majority of the department's Recovery Act 
spending is through contracts for building construction and 
renovation. DOD IG officials analyzed data on the services' planned 
projects and decided which ones to review based primarily on the size, 
location, and type of project. The DOD IG with the assistance of the 
military services' audit agencies--the Army Audit Agency, the Air 
Force Audit Agency, and the Naval Audit Service--conducted coordinated 
reviews of the projects identified through the initial risk analysis. 
As part of those reviews, auditors gathered additional information on 
contract actions for the selected projects, including whether they 
were issued as orders or modifications under existing contracts, 
whether the contracts were competitively awarded, and whether a 
surveillance plan was in place. In addition, the DOD IG and military 
services' audit agencies collected information on whether contracts 
for the projects they reviewed were awarded to 8(a) businesses, but 
the officials said that they did not assess business eligibility 
because this falls under the jurisdiction of the office within SBA 
that administers the 8(a) program. However, DOD IG officials told us 
that if they suspect that a business is not eligible for the 8(a) 
program, they refer the matter to SBA for review. The only audit work 
that directly focused on 8(a) businesses, other than the work of the 
SBA IG noted above, is a review currently being conducted by the Air 
Force Audit Agency, which is reviewing the eligibility of 8(a) 
contractors at 10 Air Force installations. As of June 2010, the Air 
Force Audit Agency had not yet issued its report. 

As of June 2010, 141 reports had been posted on www.Recovery.gov by 
the IGs for the five agencies we reviewed. In 43 of the reports, the 
IGs touched on contracting issues. Of these, 27 were reviews of 
projects at individual DOD facilities issued by the DOD IG or by the 
military services' audit agencies. Most of the IG reports that dealt 
with contracting did not identify systematic shortcomings in agency 
processes or Recovery Act contracts. Rather, contracting-related 
findings ranged from clauses omitted from individual contracts to 
observations on the completeness of contracting data reported by the 
agencies. For instance, the Air Force Audit Agency reported in its 
audit of Elmendorf Air Force Base that while the base's Recovery Act 
contracts met several requirements, such as expediting the award 
process and fostering competition, they had not fully met transparency 
requirements because the contracting office did not provide sufficient 
information on the work to be completed for one project on 
www.fedbizopps.gov.[Footnote 25] According to Office of the Secretary 
of Defense and Air Force officials, Elmendorf Air Force Base 
subsequently reposted the project on www.fedbizopps.gov to more 
accurately reflect the work accomplished. 

One IG report, however, noted significant shortcomings in agency 
contracting workforce capacity. The SBA IG determined that staffing 
levels in the agency's contracting office were insufficient.[Footnote 
26] The SBA IG found that because of vacant positions, contracting 
office staff declined from 13 to 7 personnel from June 2009 to 
February 2010, at a time when the office's workload increased as a 
result of Recovery Act implementation. The report concluded that the 
current staffing of the contracting office was insufficient to award, 
administer, and oversee Recovery Act and other contracts, and that as 
a result, the risk of fraud, waste, and abuse had increased. In our 
discussions with SBA on the report's findings, a senior procurement 
official stated that the agency has experienced further attrition in 
its acquisition workforce since this report was released. To address 
this, the agency awarded a contract to provide acquisition services 
for four contracting positions and plans to contract for services for 
six more. 

For further information on how the IGs at each of the selected 
agencies are conducting Recovery Act oversight, see appendix II. 

Selected States Vary In Their Level of Insight into Noncompetitive 
Recovery Act Contracts: 

At the state level, we were not able to determine the full extent of 
the use of noncompetitive contracting. The states we visited collect 
some aggregate data on contracts awarded by state agencies, but did 
not maintain data on contracting at the local level where a portion of 
the contracting activity occurs. These states rely on their pre-
Recovery Act contracting policies and procedures, which generally 
require competition. With respect to oversight, each state has 
supplemented its state-level guidance with some additional Recovery 
Act-specific policies and procedures. However, the states do not 
routinely provide state-level oversight of contracts awarded at the 
local level, where a portion of the Recovery Act contracting occurs. 
[Footnote 27] Representatives of the five state audit organizations 
said they could address Recovery Act contracting issues through the 
internal control work performed during the state's annual Single Audit 
or during other reviews of programs that involve Recovery Act funds, 
if contracting is identified as an area of risk. 

Selected States Vary on Information Identifying Noncompetitive 
Recovery Act Contracts: 

State-level information on the type and amount of data routinely 
collected on noncompetitive Recovery Act contracts varied in the five 
states we visited--California, Colorado, Florida, New York, and Texas. 
Officials in some states said they are collecting or could collect 
data on noncompetitive contracts awarded by the state agencies. Some 
of the states we visited currently have some level of statewide 
information on noncompetitive contracts awarded by their state 
agencies, but with limitations. Specifically, officials in the states 
we visited told us the following: 

* California's statewide contract database does not include contracts 
awarded by all of its state agencies. 

* Colorado's statewide contract database does not identify which 
contracts are funded under the Recovery Act, but noncompetitive 
Recovery Act contracts are manually reported to the state level. 

* New York's statewide contract database includes contracts awarded by 
state agencies, but does not include data on contracts awarded by 
state authorities, such as the New York State Energy Research and 
Development Authority. 

* Florida has a statewide contract database, but it is voluntary and 
not routinely used by all state agencies. 

* Texas' statewide contract database does not identify which contracts 
are funded under the Recovery Act. 

Officials in California, Colorado, and Florida said that some of their 
state agencies have awarded noncompetitive Recovery Act contracts, 
while officials in New York said none have been awarded by their state 
agencies and officials in Texas said they were not aware of any having 
been awarded. 

At the state agency level, we discussed the weatherization and 
education programs with the respective agencies responsible for 
managing these programs. In all five states, officials from these 
agencies said that they have some data on Recovery Act contracts 
awarded by their agencies. Moreover, state officials in all five 
states explained that they are not required to provide direct 
oversight of contracts awarded below the state agency level. As a 
result, they do not collect data on contracts awarded at the local 
levels by local governments or agencies where a portion of the 
Recovery Act contracting occurs. The limitations on available contract 
data, therefore, precluded us from performing an analysis on 
noncompetitive Recovery Act contracts awarded in the selected states. 

Selected States Require Competitive Contracting but Their Oversight 
Practices Vary: 

According to procurement officials in the selected states, the use of 
competition is generally required when awarding contracts, although 
exemptions are permitted. Each of the selected states permits 
exemptions to competition when contracts are awarded to another 
government entity, and most also permit exemptions when responding to 
emergencies and when only one provider is available. In the selected 
states in which state-level officials were aware of the award of 
noncompetitive Recovery Act contracts, officials said those awards 
were made between government agencies or to sole-source providers. For 
example, an agency in one state contracted with a university to 
provide training, and an agency in another state contracted with 
businesses that were the sole providers of proprietary scientific 
equipment. 

Each of the five states provides oversight of the award of Recovery 
Act contracts to varying degrees. According to officials, each state 
uses a combination of policies and procedures that existed prior to 
the Recovery Act and some additional measures to oversee these awards. 
Each state supplemented its existing contracting procedures with new 
guidance and had state agencies that realigned or hired staff to 
implement Recovery Act requirements. State officials explained that 
under existing state procedures, agencies are required to prepare 
justification documentation and obtain approval before they award 
noncompetitive contracts. In addition, state officials told us that 
generally state agencies are responsible for oversight of contracts 
their agencies award, while local entities have oversight 
responsibilities for contracts awarded at the local level. For 
example, Colorado officials approve local agencies' procurement 
processes, but the local agencies acquire weatherization materials on 
their own using a competitive bid process. 

Most Recovery Act funds to local governments flow through existing 
federal grant programs, while some of the funds are provided directly 
to local governments by federal agencies and others are passed from 
the federal agencies through state governments to local governments. 
Therefore, state officials have limited insight into contracts awarded 
at the local level. In California, for example, state education 
officials said the size of the state and its more than 1,600 local 
education entities made it impractical to track local contracts. 
Nonetheless, officials in the selected states can perform postaward 
reviews related to contract competition on an as-needed basis. 

Officials in some of the states we visited said that they did not 
receive additional resources to provide oversight of Recovery Act 
funds.[Footnote 28] To provide additional oversight, they sometimes 
shifted resources to handle Recovery Act work, which at times entailed 
shifting resources from non-Recovery Act to Recovery Act work. 
[Footnote 29] 

State Audit Organizations Might Address Recovery Act Contracting 
through Annual Single Audits or Program Reviews: 

Representatives of the five states' audit organizations[Footnote 30] 
said that their organizations could provide additional oversight of 
the states' use of Recovery Act contracting funds through the internal 
control work performed as part of the states' Single Audits,[Footnote 
31] and some explained that this could also be done through separate 
programmatic reviews if contracting is identified as an area of risk. 
Although contract competition is not the singular focus of the Single 
Audit, it nevertheless may be included as part of the internal control 
testing for a given program. For example, funding for weatherization 
programs, which increased from the pre-Recovery Act level in the 
selected states, falls under the Single Audit requirements. According 
to Florida state officials, their weatherization program funding 
increased from about $1.3 million before the Recovery Act to an 
average of $58.7 million per year over a period of 3 years. With 
respect to noncompetitive contracts, the audit organizations for some 
of the states we visited had not identified noncompetitive contracts 
as a risk area and did not plan any audits specifically targeted at 
this contracting method. Audit organization representatives in each of 
the five states we visited said that they were in the process of 
conducting reviews of some Recovery Act programs but the focus of 
these audits is not on noncompetitive contracts; however, they also 
noted that these audits could address procurement and contracting 
issues should they surface during the course of the audits. 

At the state level--unlike the federal level--Recovery Act funds were 
not specifically set aside for state audit organizations to provide 
oversight of the use of Recovery Act funds. To focus their resources, 
some state audit organizations have performed risk assessments of 
state agencies and are planning additional programmatic reviews. These 
state audit organizations used risk assessments to identify programs 
for potential review and, in some states, to maximize the use of 
limited auditing resources. State audit officials told us that the 
factors considered in their risk assessments included dollar values of 
programs, previous audit findings, internal control weaknesses 
identified as a result of the Single Audits, whether the program was 
new, or whether a program received large increases in funding. As we 
previously reported, recent budgeting challenges for state governments 
have reduced staffing levels and audit organizations have not been 
spared from budget reductions that could limit their capacity to 
perform audits involving Recovery Act funds.[Footnote 32] 

Conclusions: 

At the federal level, available data were sufficient for us to 
determine the extent to which agencies used competition for Recovery 
Act contracting, the reasons selected agencies chose not to use 
competition, and their approaches to contract oversight. In general, 
congressional and administration direction to obligate Recovery Act 
funds quickly led agencies across the government to rely heavily on 
existing contract vehicles to get work under contract. Most of these 
existing contracts, as well as most new contract actions, were 
competitive. Federal agencies have added additional oversight 
procedures, internal reporting, and coordination in response to 
Recovery Act requirements. 

Federal agency IGs focused their initial oversight efforts on areas 
they determined to be higher risk and did not target spending under 
contracts, including noncompetitive contracts. While this approach may 
have been justified initially given competing priorities and the 
relatively small percentage of obligations spent on noncompetitive 
contract actions, the result is relatively little audit coverage of 
Recovery Act contract actions under SBA's 8(a) program. This is 
significant for two reasons. First, the 8(a) program accounts for the 
overwhelming majority of noncompetitive contract obligations under the 
Recovery Act. Second, our prior work, some of which is quite recent 
and was not available to the IGs when they prepared their audit plans, 
has shown that safeguards designed to ensure that the program operates 
as intended--requiring checks on participant eligibility and limits on 
subcontracting--are not always implemented effectively. While we 
recognize that the Recovery Act guidance encourages contracting with 
small businesses, there is an opportunity for the IGs to reassess 
whether they need to focus additional audit resources on contracting 
under the 8(a) program, which accounts for nearly 80 percent of the 
new noncompetitive contract actions under the Recovery Act. 

At the state level, we were not able to determine the full extent of 
the use of noncompetitive contracting. The five states we visited 
collected some aggregate data on contracts awarded by state agencies, 
but did not maintain data on contracting at the local level where a 
portion of the contracting activity occurs. As a result, we could not 
analyze the extent of noncompetitive Recovery Act contracting within 
these states. With respect to oversight, each state has supplemented 
its state-level guidance with some additional Recovery Act-specific 
policies and procedures but does not routinely provide state-level 
oversight of contracts awarded at the local level. State audit 
organizations for the selected states are focusing their audit 
resources on programmatic reviews rather than focusing on the use of 
noncompetitive Recovery Act contracts, consistent with their 
assessments of relative risk. 

Recommendation for Executive Action: 

As the IGs of the five agencies we reviewed periodically revisit and 
revise their Recovery Act audit plans, they should assess the need for 
allocating an appropriate level of audit resources, as determined 
using their risk-based analyses, to the noncompetitive contracts 
awarded under SBA's 8(a) program. 

Agency and State Comments and Our Evaluation: 

We provided a draft of this report to DOD, DOE, HHS, NASA, SBA, and 
their respective IGs for comment. We received e-mail comments from 
DOD, HHS, and NASA, as well as the DOE IG and SBA IG, in which the 
agencies all generally agreed with the report's findings and 
recommendation or had no comments. In some cases, the agencies 
provided technical comments or clarifying information, which we 
incorporated into the report as appropriate. We received written 
comments from SBA as well as the DOD IG, DOE IG, and NASA IG. The DOD 
IG provided the department's official comments and agreed with the 
draft report and its recommendation. The DOE IG noted that DOE is one 
of the most contractor-dependent agencies in the government and that 
the DOE IG routinely considers 8(a) program contracts in its audit 
work. We consider the DOE IG's audit approach to be consistent with 
the intent of our recommendation. The NASA IG agreed with the draft 
report and its recommendation and noted that it is planning work on a 
number of Recovery Act contracts involving 8(a) program businesses. 

In its written comments, SBA noted its concern about our findings and 
recommendation regarding the 8(a) program. Specifically, SBA was 
concerned about what it viewed as our draft report's attempt to link 
the legitimate use of the 8(a) program with the results of a previous 
GAO report that found ineligible businesses receiving contracts under 
the program. SBA was also concerned that our report might be 
suggesting that use of the 8(a) program was either inappropriate or a 
risky procurement choice. We did not intend to suggest that there was 
anything improper with agencies deciding to use the 8(a) program in 
implementing the Recovery Act. In fact, our report points out that 
OMB's Recovery Act guidance specifically lists providing opportunities 
for small businesses to the maximum extent practicable and supporting 
disadvantaged businesses as goals for agencies using Recovery Act 
funds. We mentioned our prior findings regarding 8(a) eligibility only 
to illustrate that there may be issues that merit consideration by 
agency IGs as part of their overall approach to audits related to 
Recovery Act contracts that were not apparent when they developed 
their Recovery Act audit plans. 

We also provided a draft of this report to representatives within the 
states of California, Colorado, Florida, New York, and Texas for 
comment. We received e-mail comments from various officials within the 
states of California, Colorado, Florida, and New York, including some 
of the state audit organizations, in which they generally agreed with 
the report's findings or had no comments. Some state officials 
provided technical comments or clarifying information in their e-
mails, which we incorporated into the report as appropriate. We 
received written comments from the states of Florida and Texas. 
Florida generally agreed with the report's findings. Texas provided a 
proposed factual addition and a technical comment, which we 
incorporated as appropriate. Texas also made an observation that 
Congress had not provided funds for state oversight of Recovery Act 
funds. Although the Recovery Act did not provide such funds, as noted 
in footnote 28 there is guidance from OMB that could permit 
reimbursement of such state expenses under specified circumstances. 

The written comments are reprinted in appendixes IV through IX. 

We are sending copies of this report to interested congressional 
committees, as well as the Secretaries of the Departments of Defense, 
Energy, and Health and Human Services; the Administrators of the 
National Aeronautics and Space Administration and the Small Business 
Administration; and the Inspectors General of these five agencies. In 
addition, we are sending the report to officials in the five states 
covered in our review. The report also is available at no charge on 
the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-4841. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. GAO staff who made major contributions to this 
report are listed in appendix X. 

Sincerely yours, 

Signed by: 

John K. Needham: 
Director, Acquisition and Sourcing Management: 

[End of section] 

Appendix I: Federal Agencies' Obligations on Competitive and 
Noncompetitive Recovery Act Contract Actions as of May 2010: 

Agency: Agency for International Development; 
Competitive contract actions[A]: Number of actions: 4; 
Competitive contract actions[A]: Obligations: $11,494,769; 
Noncompetitive[B] contract actions: Number: of actions: 4; 
Noncompetitive[B] contract actions: Obligations: $4,447,731. 

Agency: Corporation for National and Community Service; 
Competitive contract actions[A]: Number of actions: 9; 
Competitive contract actions[A]: Obligations: $1,249,405; 
Noncompetitive[B] contract actions: Number: of actions: 7; 
Noncompetitive[B] contract actions: Obligations: $13,694,875. 

Agency: Department of Agriculture; 
Competitive contract actions[A]: Number of actions: 2,468; 
Competitive contract actions[A]: Obligations: $421,954,996; 
Noncompetitive[B] contract actions: Number: of actions: 700; 
Noncompetitive[B] contract actions: Obligations: $105,021,223. 

Agency: Department of Commerce; 
Competitive contract actions[A]: Number of actions: 242; 
Competitive contract actions[A]: Obligations: $337,216,693; 
Noncompetitive[B] contract actions: Number: of actions: 55; 
Noncompetitive[B] contract actions: Obligations: $65,958,421. 

Agency: Department of Defense; 
Competitive contract actions[A]: Number of actions: 7,139; 
Competitive contract actions[A]: Obligations: $6,529,526,339; 
Noncompetitive[B] contract actions: Number: of actions: 1,559; 
Noncompetitive[B] contract actions: Obligations: $969,149,442. 

Agency: Department of Education; 
Competitive contract actions[A]: Number of actions: 69; 
Competitive contract actions[A]: Obligations: $61,052,094; 
Noncompetitive[B] contract actions: Number: of actions: 11; 
Noncompetitive[B] contract actions: Obligations: $37,967. 

Agency: Department of Energy; 
Competitive contract actions[A]: Number of actions: 734; 
Competitive contract actions[A]: Obligations: $6,990,566,222; 
Noncompetitive[B] contract actions: Number: of actions: 100; 
Noncompetitive[B] contract actions: Obligations: $133,670,179. 

Agency: Department of Health and Human Services; 
Competitive contract actions[A]: Number of actions: 733; 
Competitive contract actions[A]: Obligations: $857,828,477; 
Noncompetitive[B] contract actions: Number: of actions: 163; 
Noncompetitive[B] contract actions: Obligations: $459,516,280. 

Agency: Department of Homeland Security; 
Competitive contract actions[A]: Number of actions: 132; 
Competitive contract actions[A]: Obligations: $631,490,411; 
Noncompetitive[B] contract actions: Number: of actions: 13; 
Noncompetitive[B] contract actions: Obligations: $3,991,092. 

Agency: Department of Housing and Urban Development; 
Competitive contract actions[A]: Number of actions: 29; 
Competitive contract actions[A]: Obligations: $5,406,066; 
Noncompetitive[B] contract actions: Number: of actions: 11; 
Noncompetitive[B] contract actions: Obligations: $4,537,987. 

Agency: Department of Justice; 
Competitive contract actions[A]: Number of actions: 8; 
Competitive contract actions[A]: Obligations: $1,824,410; 
Noncompetitive[B] contract actions: Number: of actions: 5; 
Noncompetitive[B] contract actions: Obligations: $164,862. 

Agency: Department of Labor; 
Competitive contract actions[A]: Number of actions: 594; 
Competitive contract actions[A]: Obligations: $206,515,164; 
Noncompetitive[B] contract actions: Number: of actions: 50; 
Noncompetitive[B] contract actions: Obligations: $33,566,097. 

Agency: Department of State; 
Competitive contract actions[A]: Number of actions: 1,291; 
Competitive contract actions[A]: Obligations: $72,579,227; 
Noncompetitive[B] contract actions: Number: of actions: 937; 
Noncompetitive[B] contract actions: Obligations: $12,892,342. 

Agency: Department of the Interior; 
Competitive contract actions[A]: Number of actions: 3,231; 
Competitive contract actions[A]: Obligations: $1,026,923,760; 
Noncompetitive[B] contract actions: Number: of actions: 494; 
Noncompetitive[B] contract actions: Obligations: $111,000,796. 

Agency: Department of the Treasury; 
Competitive contract actions[A]: Number of actions: 7; 
Competitive contract actions[A]: Obligations: $14,939,935; 
Noncompetitive[B] contract actions: Number: of actions: 4; 
Noncompetitive[B] contract actions: Obligations: $716,305. 

Agency: Department of Transportation; 
Competitive contract actions[A]: Number of actions: 147; 
Competitive contract actions[A]: Obligations: $323,955,926; 
Noncompetitive[B] contract actions: Number: of actions: 32; 
Noncompetitive[B] contract actions: Obligations: $20,915,472. 

Agency: Department of Veterans Affairs; 
Competitive contract actions[A]: Number of actions: 1,408; 
Competitive contract actions[A]: Obligations: $564,805,231; 
Noncompetitive[B] contract actions: Number: of actions: 81; 
Noncompetitive[B] contract actions: Obligations: $16,923,677. 

Agency: Environmental Protection Agency; 
Competitive contract actions[A]: Number of actions: 198; 
Competitive contract actions[A]: Obligations: $281,852,254; 
Noncompetitive[B] contract actions: Number: of actions: 87; 
Noncompetitive[B] contract actions: Obligations: $5,372,460. 

Agency: Federal Communications Commission; 
Competitive contract actions[A]: Number of actions: 424; 
Competitive contract actions[A]: Obligations: $83,641,988; 
Noncompetitive[B] contract actions: Number: of actions: 14; 
Noncompetitive[B] contract actions: Obligations: $2,926,691. 

Agency: General Services Administration; 
Competitive contract actions[A]: Number of actions: 17,521; 
Competitive contract actions[A]: Obligations: $4,198,806,529; 
Noncompetitive[B] contract actions: Number: of actions: 425; 
Noncompetitive[B] contract actions: Obligations: $232,267,774. 

Agency: National Aeronautics and Space Administration; 
Competitive contract actions[A]: Number of actions: 272; 
Competitive contract actions[A]: Obligations: $591,895,269; 
Noncompetitive[B] contract actions: Number: of actions: 82; 
Noncompetitive[B] contract actions: Obligations: $298,932,194. 

Agency: National Science Foundation; 
Competitive contract actions[A]: Number of actions: 4; 
Competitive contract actions[A]: Obligations: $50,500,000; 
Noncompetitive[B] contract actions: Number: of actions: 0; 
Noncompetitive[B] contract actions: Obligations: 0. 

Agency: Small Business Administration; 
Competitive contract actions[A]: Number of actions: 13; 
Competitive contract actions[A]: Obligations: $731,216; 
Noncompetitive[B] contract actions: Number: of actions: 29; 
Noncompetitive[B] contract actions: Obligations: $10,418,888. 

Agency: Smithsonian Institution; 
Competitive contract actions[A]: Number of actions: 32; 
Competitive contract actions[A]: Obligations: $18,579,372; 
Noncompetitive[B] contract actions: Number: of actions: 5; 
Noncompetitive[B] contract actions: Obligations: $587,105. 

Agency: Social Security Administration; 
Competitive contract actions[A]: Number of actions: 14; 
Competitive contract actions[A]: Obligations: $3,582,185; 
Noncompetitive[B] contract actions: Number: of actions: 2; 
Noncompetitive[B] contract actions: Obligations: $2,441,646. 

Agency: Total[C]; 
Competitive contract actions[A]: Number of actions: 36,723; 
Competitive contract actions[A]: Obligations: $23,288,917,937; 
Noncompetitive[B] contract actions: Number: of actions: 4,870; 
Noncompetitive[B] contract actions: Obligations: $2,509,151,506. 

Source: Federal Procurement Data System--Next Generation data as of 
May 12, 2010. 

[A] Contract actions include new contract awards and modifications to 
or orders from existing contracts. 

[B] For the purposes of this report, noncompetitive contract actions 
include actions that were awarded using the exceptions to full and 
open competition in the Federal Acquisition Regulation (FAR), 
including, for example, sole-source contracts awarded under SBA's 8(a) 
program as well as contracts awarded without competition under 
simplified acquisition procedures. 

[C] Totals exclude 456 Recovery Act contract actions for which the 
extent of competition was not recorded in FPDS-NG. These actions 
represent a total of $324,304,140 in Recovery Act obligations. 

[End of table] 

[End of section] 

Appendix II: Key Recovery Act Programs, Spending, Contract File Review 
Observations, and Oversight for Selected Agencies: 

[End of section] 

Department of Defense: 

DOD's mission is to provide the military forces needed to deter war 
and to protect the security of our country. The mission of USACE, one 
of DOD's construction agents, is to provide vital public engineering 
services in peace and war to strengthen our nation's security, 
energize the economy, and reduce risks from disasters. 

Key Recovery Act Programs: 

DOD received approximately $7.4 billion in defense-related 
appropriations under the Recovery Act, with an additional $4.6 billion 
appropriated to USACE for its Civil Works Program. According to DOD's 
Recovery Act plan, about 88 percent of its non-USACE Recovery Act 
funding is for facilities infrastructure. This includes DOD's 
Facilities Sustainment, Restoration, and Modernization program, the 
Military Construction program, and the Energy Conservation Investment 
Program. The remaining funds are for the expansion of the Homeowners 
Assistance Program providing assistance to military and civilian 
families and the Near Term Energy-Efficient Technologies program. 
Recovery Act funds for USACE are allocated to various business 
programs under the Civil Works Program including emergency management, 
environment and environmental stewardship, flood risk management, 
hydropower, navigation, recreation, regulatory, and water storage for 
water supply. DOD program areas receiving Recovery Act funding are 
listed in table 2. 

Table 2: DOD Recovery Act Funds Allocation: 

Program area: Civil Works Program (USACE); 
Recovery Act funding: $4.60 billion; 
Purpose: Construction, operations and maintenance for various 
activities under the Civil Works Program. 

Program area: Facilities Sustainment, Restoration and Modernization; 
Recovery Act funding: $4.26 billion; 
Purpose: Upgrades of existing DOD buildings, including energy-related 
improvements. 

Program area: Military Construction; 
Recovery Act funding: $2.18 billion; 
Purpose: Construction of new buildings; 
more than half is for hospitals. 

Program area: Energy Conservation Investment Program; 
Recovery Act funding: $0.12 billion; 
Purpose: Energy efficiency improvements to existing buildings. 

Program area: Expanded Homeowners Assistance Program; 
Recovery Act funding: $0.56 billion; 
Purpose: Financial assistance to military and civilian personnel who 
experience a financial loss on the sale of their homes. 

Program area: Near Term Energy-Efficient Technologies; 
Recovery Act funding: $0.30 billion; 
Purpose: Development of energy-efficient technologies. 

Sources: DOD and USACE. 

[End of table] 

Recovery Act Spending: 

As of May 2010, DOD (including USACE) obligated more than $7.5 billion 
of Recovery Act funds on contracts. DOD obligated about two-thirds of 
its Recovery Act funds in the last two quarters of fiscal year 2009, 
from April through September 2009. Figure 3 shows DOD obligations of 
Recovery Act funds through contracts by fiscal quarter. 

Figure 3: DOD Obligations of Recovery Act Funds through Contracts, by 
Fiscal Quarter: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year quarter: Q3 FY09; 
DOD Obligations of Recovery Act Funds: $1.66 billion. 

Fiscal year quarter: Q4 FY09; 
DOD Obligations of Recovery Act Funds: $3.30 billion. 

Fiscal year quarter: Q1 FY10; 
DOD Obligations of Recovery Act Funds: $1.02 billion. 

Fiscal year quarter: Q2 FY10; 
DOD Obligations of Recovery Act Funds: $1.24 billion. 

Fiscal year quarter: Q3 FY10; 
DOD Obligations of Recovery Act Funds: $269.72 million. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

Most of the funds that DOD obligated under Recovery Act contract 
actions were on existing contracts, as shown in figure 4. Of those 
funds obligated on new contracts, most were obligated to competitively 
awarded contracts. Approximately 17 percent of obligations on new 
contracts were obligated to noncompetitively awarded contracts, most 
of which were awarded to 8(a) program small businesses. 

Figure 4: DOD Recovery Act Obligations on New and Existing Federal 
Contracts by Extent of Competition as of May 12, 2010: 

[Refer to PDF for image: pie-chart and subchart] 

Contract obligations: 
Existing contracts: 62%; 
New contracts: 38%: 
* Competed: 83%; 
* Noncompeted: 18%: 
- 8(a) sole source: $445 million; 
- Simplified acquisition procedures: $2 million; 
- Sole or unique source: $16 million; 
- Other: $11 million. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

Observations from the Site Review at USACE Sacramento District: 

We selected 67 noncompetitive contracts, task orders, or modifications 
for review at the USACE Sacramento District. Most of these actions 
were placed under existing indefinite delivery/indefinite quantity 
[Footnote 33] (IDIQ) contracts that had been awarded to 8(a) program 
businesses. Sacramento District contracting officials told us that 
they typically award IDIQ contracts to 8(a) program businesses for 
smaller-dollar projects as part of their regular business processes. 
These contract vehicles can then be used to quickly place orders for 
individual projects within the scope of the contract until the total 
value of the contract approaches the $3.5 million threshold for 
noncompetitive 8(a) program awards. 

About half the dollars obligated under the Recovery Act by the 
Sacramento District--over $53 million--were used to accelerate funding 
of an existing project to relocate train tracks in Napa, California as 
part of a flood control project. This action is considered 
noncompetitive because the original contract was awarded sole-source 
to an Alaska Native Corporation in 2008, prior to the enactment of the 
Recovery Act; the contract was modified in 2009 to add Recovery Act 
funds. According to USACE officials, the Recovery Act funding 
accelerated the completion of the flood control project, which also 
decreased the total cost of the project. 

Some of the Recovery Act orders at Sacramento District were 
administered by USACE on behalf of other DOD components, such as the 
Army and Air Force. For instance, USACE placed an order on an existing 
IDIQ contract with an 8(a) program business for work on ventilation 
controls in buildings at Beale Air Force Base in Roseville, California. 

Table 3 provides additional details on some noncompetitive contract 
actions we reviewed at USACE Sacramento District. These examples 
illustrate the variety of services and supplies being acquired, the 
amount of Recovery Act funding used, and the reason a contract action 
was not competed. 

Table 3: Examples of Noncompetitive Recovery Act Contract Actions from 
the DOD USACE Sacramento Site Review: 

Purpose: Repair of fire suppression building at Military Ocean 
Terminal; 
Recovery Act funding: $594,922; 
Reason contract action was not competed or is considered not 
competed[A]: Modification to an existing noncompetitive contract; 
Notes: The incumbent is an 8(a) program business. 

Purpose: Placing and programming the ventilation controls in various 
buildings at Beale Air Force Base, California; 
Recovery Act funding: $241,639; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: This contract was awarded to an 8(a) program business and the 
majority of the work is to be provided by subcontractors. The 
programming to make the controls function is proprietary and may only 
be performed by a particular subcontractor. 

Purpose: Upgrades to electrical equipment at Terminus Dam, Lake 
Kaweah, and Lemon Cove, California; 
Recovery Act funding: $97,891; 
Reason contract action was not competed or is considered not 
competed[A]: Only one source available; 
Notes: The district had difficulty procuring services for remote 
locations such as Lake Kaweah and previous quotes from prospective 
businesses included travel costs that were cost prohibitive. Only one 
business in the local area with the capability to perform the work was 
identified. 

Purpose: Remediation/revegetation of area around Folsom Bridge; 
Recovery Act funding: $2,506,590; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: Market research was performed to identify a HUBZone contractor 
with the capability to perform the work, but the contract was 
ultimately awarded to an 8(a) program business. 

Purpose: Flood control project in downtown Napa, California, involving 
relocation of a railroad track, including: raising the railroad track; 
construction of four approaches and two bridges; 
and the modification of several grade crossings at multiple surface 
street intersections; 
Recovery Act funding: $53,373,325; 
Reason contract action was not competed or is considered not 
competed[A]: Modification on a pre-Recovery Act noncompetitive 
contract; 
Notes: This modification was to terminate for convenience the full 
contract value and reinstate that amount using Recovery Act funds. 
According to USACE officials, using Recovery Act funds would allow the 
project to be completed sooner, which would ultimately reduce the 
region's exposure to flood risks and reduce overhead, inflation, and 
administration costs. 

Purpose: Remove/replace existing gutters and downspouts at various 
warehouses at Sierra Army Depot; 
Recovery Act funding: $421,210; 
Reason contract action was not competed or is considered not 
competed[A]: Task order on a pre-Recovery Act noncompetitive contract; 
Notes: This task order is to an 8(a) program business using an 
existing IDIQ contract. 

Purpose: Application of a computer program to support updates to water 
control plans for Alabama-Coosa-Tallapoosa River Basin and 
Apalachicola-Chattahoochee-Flint River Basin; 
Recovery Act funding: $312,383; 
Reason contract action was not competed or is considered not 
competed[A]: Task order on an existing noncompetitive contract; 
Notes: This task order was issued under a blanket purchase agreement. 
The business had institutional knowledge associated with hydrologic 
software that could not be duplicated by another business without many 
months or years of lost productivity. 

Purpose: Widening of levee crown and provide restoration work at sites 
in Carmichael, California; 
Recovery Act funding: $1,810,392; 
Reason contract action was not competed or is considered not 
competed[A]: Task order on a pre-Recovery Act noncompetitive contract; 
Notes: This task order is to an 8(a) program business using an 
existing IDIQ contract. 

Purpose: Asbestos removal at various buildings at Presidio of 
Monterey, California; 
Recovery Act funding: $281,234; 
Reason contract action was not competed or is considered not 
competed[A]: Task order on a pre-Recovery Act noncompetitive contract; 
Notes: This task order is to an 8(a) program business using an 
existing IDIQ contract. 

Purpose: Electric services for campsite and bathroom expansions at 
Cordoniz Campground; 
Recovery Act funding: $16,280; 
Reason contract action was not competed or is considered not 
competed[A]: Only one source available; 
Notes: Provisions of utility services are controlled by the State of 
California Public Utilities Commission and the selected business was 
the only provider of electric service in the county. 

Source: GAO analysis of USACE contract documents: 

[A] Modifications or task orders on noncompetitive contracts existing 
prior to enactment of the Recovery Act are considered noncompetitive. 

[End of table] 

Agency Contracts Requiring Justifications for Noncompetitive Awards: 

Using FPDS-NG data as of February 19, 2010, we identified 16 DOD 
contracts that required documented justification and approval for 
using other than full and open competition. Our review of these 
justification documents found that they included information to 
support the stated reason for a noncompetitive award. The most common 
reason, cited in 15 of the contract files, was that only one source 
was able to provide the product or service. Within this group, about 
half were contracts for utilities such as water service, while most of 
the others within this group were for proprietary equipment or 
technology that could only be provided by one business. For instance, 
one contract was for the purchase of replacement parts for a hydraulic 
system at a USACE dam. The justification stated that the contract was 
awarded without competition because the original manufacturer of the 
equipment is the only available source of replacement parts. 

Agency Contract Oversight: 

DOD efforts to provide oversight and transparency for Recovery Act 
activities include internal coordination, increased reporting to 
management, and recipient reporting. 

Coordination: The Office of the Secretary of Defense (OSD) assigned 
the Principal Deputy Under Secretary of Defense within its 
Comptroller's office responsibility for Recovery Act oversight and 
coordination at the department level. OSD also established the 
Recovery Act Defense Department Working Group, which holds a weekly 
meeting that includes representatives from each of the services; the 
IG's office; the small business coordinator; the Acquisition, 
Technology and Logistics office; and other entities within DOD. 
According to officials, the working group's discussions cover a 
variety of Recovery Act issues at a high level, some of which are 
specifically contracting-related, such as contract obligations and 
updates on specific programs. 

Reporting: At the OSD level, information on Recovery Act activities, 
including contracting, is gathered from the individual services and 
FPDS-NG and compiled in the Business Enterprise Information System, 
which enables management to oversee DOD's Recovery Act programs across 
all three services. For instance, the system includes data on contract 
obligations and estimated completion dates for DOD Recovery Act 
projects, and is updated continually. Individual DOD components have 
also implemented additional management reporting--for instance, USACE 
generates a weekly report for its leadership on the progress of 
Recovery Act projects. 

Additional review: DOD did not create any additional levels of pre- 
award approval at the department level; contracting is administered by 
the individual services. USACE did not implement any additional levels 
of pre-award approval for Recovery Act contracts. 

Issues: OSD officials said that no schedule or cost overrun issues 
have come to their attention. The only contract-related problem that 
they have had to address at the department level has been with 
recipient reporting and ensuring that recipient reports are filed by 
the contractors and are accurate. 

IG Contract Oversight: 

Risk assessment: When designing its Recovery Act audit approach, DOD 
IG used data on individual DOD projects to assess risk and focus its 
efforts. The risk assessment ranked individual projects, incorporating 
the dollar value of the contracts, project type, location, and 
contract characteristics, such as the level of competition, as risk 
factors. DOD IG initially selected the 83 highest-risk projects based 
on these criteria. Once on-site reviews began, the information 
gathered was used to further refine the risk assessment criteria and 
select some additional projects. 

Audit Approach: The DOD IG established a three-phase review of 
Recovery Act-related activities. 

* Phase 1, review of DOD and program-specific Recovery Act 
implementation plans, has been completed. These reviews found that the 
DOD and program plans met Office of Management and Budget (OMB) 
standards, although the DOD IG called for additional detail regarding 
how the agency arrived at its projections of the proportion of 
contracts that would be awarded competitively. 

* Phase 2 is a review of the implementation of the Recovery Act 
programs, focusing on the projects based on the results of the risk 
assessment. DOD IG identified sites to visit for the Facilities 
Sustainment, Restoration, and Modernization and Military Construction 
programs. The DOD IG's reviews within each military service are being 
conducted in cooperation with the respective military service audit 
agencies. As part of this work, DOD IG and audit agency staff review 
the extent of competition and the related documentation for selected 
contracts. The Air Force Audit Agency is also conducting some 
additional Recovery Act reviews beyond those it is conducting on 
behalf of the DOD IG. This work is ongoing. 

* In Phase 3, which is not yet underway, the DOD IG will provide 
oversight of the construction of the projects, ensure that all 
required reporting is taking place, and review the results of the 
projects. 

Findings: As of June 9, 2010, the DOD IG and military service audit 
agencies had posted reports on about 27 individual site reviews on 
www.Recovery.gov. These reports have found management of Recovery Act 
contracting to be generally good, although they suggest areas for 
improvement at some specific installations, such as ensuring that all 
Recovery Act-related clauses are included in every contract, or 
developing a plan to manage recipient reporting. 

Department of Energy: 

DOE works to advance the national, economic, and energy security of 
the United States; to promote scientific and technological innovation 
in support of that mission; and to ensure the environmental cleanup of 
the national nuclear weapons complex. 

Key Recovery Act Programs: 

DOE received approximately $36.7 billion in funding under the Recovery 
Act. Of this, $32.7 billion was for the award of grants and contracts. 
[Footnote 34] However, many programs involved comparatively little 
contracting by DOE--for instance, the Weatherization Assistance 
Program ($5 billion) provided grants to states. By contrast, funding 
for cleanup of nuclear sites ($6 billion) is spent primarily through 
contracts. DOE program areas receiving Recovery Act funding are listed 
in table 4. 

Table 4: DOE Recovery Act Funds Allocation: 

Program area: Energy efficiency and renewable energy; 
Recovery Act funding (dollars in billions): $13.64 billion; 
Purpose: Energy efficiency and renewable energy research and 
initiatives, including home weatherization. 

Program area: Cleanup of nuclear sites; 
Recovery Act funding: $6.0 billion; 
Purpose: Remediation of contaminated former nuclear sites. 

Program area: Smart grid and efficient electrical transmission; 
Recovery Act funding: $4.5 billion; 
Purpose: Grants, demonstration programs, and planning related to 
electrical transmission technology. 

Program area: Carbon capture/storage; 
Recovery Act funding: $3.4 billion; 
Purpose: Initiatives and research and carbon capture and storage. 

Program area: Transportation; 
Recovery Act funding: $2.9 billion; 
Purpose: Investments in new fuel and vehicle technologies. 

Program area: Scientific research; 
Recovery Act funding: $2.0 billion; 
Purpose: Scientific research grants, including funding for the 
Advanced Research Projects Agency. 

Source: DOE. 

[End of table] 

Recovery Act Spending: 

As of May 2010, DOE had obligated more than $7.1 billion of Recovery 
Act funds through contracts. Most of the DOE Recovery Act contracting 
funds to date were obligated within the last two quarters of fiscal 
year 2009, from April through September 2009. Figure 5 shows DOE 
obligations of Recovery Act funds through contracts by fiscal quarter. 

Figure 5: DOE Obligations of Recovery Act Funds through Contracts, by 
Fiscal Quarter: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year quarter: Q3 FY09; 
DOE Obligations of Recovery Act Funds: $4.14 billion. 

Fiscal year quarter: Q4 FY09; 
DOE Obligations of Recovery Act Funds: $2.51 billion. 

Fiscal year quarter: Q1 FY10; 
DOE Obligations of Recovery Act Funds: $99 million. 

Fiscal year quarter: Q2 FY10; 
DOE Obligations of Recovery Act Funds: $211 million. 

Fiscal year quarter: Q3 FY10; 
DOE Obligations of Recovery Act Funds: $177.2 million. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

Nearly all--almost 100 percent--of the funds that DOE obligated under 
Recovery Act contract actions were on existing contracts, as shown in 
figure 6. About 97 percent of all Recovery Act funds at DOE were on 
contract actions coded in FPDS-NG as awarded competitively. However, 
among the small amount of funds obligated through new contracts, 92 
percent were obligated on noncompetitively awarded contracts. 

Figure 6: DOE Recovery Act Obligations on New and Existing Federal 
Contracts by Extent of Competition as of May 12, 2010: 

[Refer to PDF for image: pie-chart and subchart] 

Contract obligations: 
Existing contracts: 100%; 
New contracts: less than 1%: 
* Competed: 8%; 
* Noncompeted: 92%: 
- 8(a) sole source: $3 million; 
- Simplified acquisition procedures: $4 million; 
- Sole or unique source: $4 million. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

Observations from the Site Review at the Environmental Management 
Consolidated Business Center: 

Of the 16 contract actions we reviewed at DOE's Environmental 
Management Consolidated Business Center, all were orders or 
modifications on existing noncompetitive contracts. Several added 
funding to existing remediation projects for sites with radioactive 
contamination. For example, $1.9 million in Recovery Act funds were 
obligated on a contract for environmental remediation for the Uranium 
Mill Tailings Remediation Action in Moab, Utah. Other contracts were 
for administrative support and involved smaller amounts of Recovery 
Act funds. For instance, DOE issued an order on an existing contract 
for monitoring and reporting support. 

Table 5 provides additional details on some noncompetitive contract 
actions we reviewed at the Environmental Management Consolidated 
Business Center. These examples illustrate the variety of services and 
supplies being acquired, the amount of Recovery Act funding used, and 
the reason a contract action was not competed. 

Table 5: Examples of Noncompetitive Contract Actions from the DOE 
Environmental Management Consolidated Business Center Site Review: 

Purpose: Waste management, environmental restoration, program support, 
and landlord activities during the period required to complete an 
environmental impact statement related to closure of the facility; 
Recovery Act funding: $15,875,000; 
Reason contract action was not competed or is considered not 
competed[A]: Modification of a noncompetitive contract; 
Notes: The facility requires remediation prior to closure as it was 
involved in nuclear energy research and is within an area owned by the 
business. 

Purpose: Support for uranium mill tailing remediation at Moab, Utah; 
Recovery Act funding: $1,900,000; 
Reason contract action was not competed or is considered not 
competed[A]: Modification of a noncompetitive contract; 
Notes: According to DOE contracting officials, the original contract 
was awarded sole-source to a tribal 8(a) program business because it 
resulted in a faster award, helped meet DOE socioeconomic contracting 
goals, and allowed the agency to address concerns of the local tribal 
population. 

Purpose: Deactivation and decommissioning of the graphite reactor and 
its associated facility at Brookhaven National Laboratory; 
Recovery Act funding: $29,524; 
Reason contract action was not competed or is considered not 
competed[A]: Noncompetitive task order; 
Notes: A task order was issued to the incumbent business instead of 
selecting another contractor because it was determined that the 
business had corporate knowledge of the working conditions, disposal 
options, and Laboratory unique rules and regulations. Selection of 
another contractor to perform these requirements was determined to 
cost the government significantly more. 

Purpose: Support for monitoring and reporting on technical, 
programmatic, regulatory, environmental, safety and health, and 
execution issues of site work funded by the Recovery Act; 
Recovery Act funding: $265,047; 
Reason contract action was not competed or is considered not 
competed[A]: Modification to a task order issued under an existing 
noncompetitive contract; 
Notes: This contract is to provide support services for 1 year. 

Source: GAO analysis of DOE contract documents. 

[A] Modifications or task orders on noncompetitive contracts existing 
prior to enactment of the Recovery Act are considered noncompetitive. 

[End of table] 

Agency Contracts Requiring Justifications for Noncompetitive Awards: 

In a review of FPDS data as of February 19, 2010, we did not identify 
any new noncompetitive DOE contracts requiring a documented 
justification and approval for being awarded noncompetitively. 

Agency Contract Oversight: 

DOE efforts to provide oversight and transparency for Recovery Act 
activities include internal coordination, increased reporting to 
management, and recipient reporting. 

Coordination: DOE created the Senior Advisor position in the Office of 
the Secretary of Energy charged with overseeing Recovery Act 
implementation. This official leads the Office of the Recovery Act, 
which holds regular meetings with key officials from each of the 
agency's program and functional divisions. These meetings were held 
daily in the first months of Recovery Act implementation and are now 
held weekly. According to agency officials, a primary goal of these 
coordination meetings is to create strong links between the work of 
program offices and that of the functional offices, such as 
contracting, that support the programs. Topics of discussion at these 
meetings include the status of ongoing projects, areas of Recovery Act 
implementation identified as lagging, and other issues raised through 
review of agency data or by meeting participants. Officials said that 
Recovery Act coordination teams have also been established within 
individual DOE functional offices. 

Reporting: DOE increased the amount of internal reporting as part of 
its Recovery Act oversight. An internal system, iPortal, reports 
detailed financial, earned value management,[Footnote 35] performance, 
risk, and job creation data on DOE projects. This system had already 
been in place, but was expanded for the Recovery Act to support more 
frequent reporting, performance dashboard displays, and an increased 
number of users from across the agency. The iPortal system generates 
automated daily and weekly reports to agency officials on key aspects 
of Recovery Act implementation; officials also use it to browse data 
on individual programs and projects. In addition, officials said that 
each program participates in a quarterly review of Recovery Act 
performance. 

Additional review: According to DOE officials, all projects receiving 
Recovery Act funding had to be approved by the program office, the 
Office of the Recovery Act, the Under Secretary, and the Secretary. 
The projects were also reviewed and approved by OMB before contract 
performance could begin. After these projects completed this review 
process, DOE did not impose any additional levels of pre-award 
contract review beyond its normal processes, according to officials. 

Issues: Agency officials said that they had not encountered any 
notable problems in implementing Recovery Act contracts. 

IG Contract Oversight: 

Risk assessment: According to DOE IG officials, the DOE IG's Office of 
Audit Services conducts an annual risk assessment, and in response to 
the Recovery Act, the office incorporated its programs into the 
existing process. Officials said that this assessment includes 
collective judgment of risks and vulnerabilities from the DOE IG's 
previous audit work, and combines these risks with other factors such 
as the level of funding. DOE IG officials said that they were familiar 
with existing remediation contracts through their prior work, and 
determined that adding additional funding to them was not high risk. 

Audit approach: DOE IG created a tiered approach to oversight of 
Recovery Act funds. Because the areas identified in the risk 
assessment do not emphasize contracting, only portions of the audit 
approach include contracting. 

* Tier 1: Review the department's internal control structure and 
management of the most significant programs (those exceeding $500 
million) under the Recovery Act. 

* Tier 2: Examine the efficiency and effectiveness of the department's 
distribution of funds to primary recipients such as state and local 
governments. 

* Tier 3: Examine the use of funds by contract and grant recipients 
through transaction testing. Because grants represent a larger share 
of DOE Recovery Act funds, DOE IG officials said that grant programs 
have been the focus of the majority of their reviews. 

Findings: DOE IG has released seven Recovery Act-related reports that 
address contracting issues. Most of these are not direct reviews of 
the agency's Recovery Act spending, but rather address previously 
identified management issues that the DOE IG determined could have an 
impact on the agency's Recovery Act programs. For example, the DOE IG 
issued a report on the agency's management of contract fines, 
penalties and legal costs, and noted the potential impact on Recovery 
Act implementation. 

Department of Health and Human Services: 

HHS's mission is to enhance the health and well-being of Americans by 
providing for effective health and human services and by fostering 
strong, sustained advances in the sciences, underlying medicine, 
public health, and social services. 

Key Recovery Act Programs: 

The Recovery Act provided over $145 billion to HHS of which the agency 
has allocated over $90 billion (63 percent) to improving and 
preserving health care. Over $25 billion or 18 percent will be used 
for health information technology. Spending on children and family 
services and scientific research and facilities make up most of the 
remaining funds. As of June 30, 2010 HHS has obligated over $87 
billion of its Recovery Act funds, including nearly $1.3 billion in 
contracts and orders. HHS program areas receiving Recovery Act funding 
are listed in table 6. 

Table 6: HHS Recovery Act Funds Allocation: 

Program area: Improving and Preserving Health Care; 
Recovery Act funding: $91.6 billion; 
Purpose: Temporary increase in Medicaid, assistance to hospitals, 
tribal protections, and health professions training and support. 

Program area: Health Information Technology; 
Recovery Act funding: $25.8 billion; 
Purpose: Accelerating the adoption of health information technology, 
such as electronic health records. 

Program area: Children & Community Services; 
Recovery Act funding: $13.3 billion; 
Purpose: Funding for programs such adoption and foster care 
assistance, meals for the elderly and persons with disabilities, Head 
Start, and subsidized child care to support children and families. 

Program area: Scientific Research and Facilities; 
Recovery Act funding: $10.0 billion; 
Purpose: Research performed at the National Institutes of Health (NIH) 
in areas of prevention, detection, diagnosis, and treatment of disease 
and disability; includes funding for construction and maintenance of 
research facilities. 

Program area: Community Health Care Services; 
Recovery Act funding: $2.8 billion; 
Purpose: Expansion, improvement, and renovation at community and 
Indian Health Center facilities. 

Program area: Comparative Effectiveness; 
Recovery Act funding: $1.1 billion; 
Purpose: Research to conduct comparisons of different interventions 
and strategies to prevent, diagnose, treat and monitor health 
conditions. 

Program area: Prevention & Wellness; 
Recovery Act funding: $1.0 billion; 
Purpose: Disease prevention, immunization and infection reduction 
efforts. 

Program area: Accountability and Information Technology Security; 
Recovery Act funding: $0.1 billion; 
Purpose: HHS IG oversight and increased security of computer systems. 

Source: HHS. 

[End of table] 

Recovery Act Spending: 

Recovery Act contract obligations peaked in the fourth quarter of 
fiscal year 2009 at $752 million. These obligations have been below 
$300 million in each subsequent quarter. Figure 7 shows HHS 
obligations of Recovery Act funds through contracts by fiscal quarter. 

Figure 7: HHS Obligations of Recovery Act Funds through Contracts, by 
Fiscal Quarter: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year quarter: Q3 FY09; 
HHS Obligations of Recovery Act Funds: $57 million. 

Fiscal year quarter: Q4 FY09; 
HHS Obligations of Recovery Act Funds: $752 million. 

Fiscal year quarter: Q1 FY10; 
HHS Obligations of Recovery Act Funds: $122 million. 

Fiscal year quarter: Q2 FY10; 
HHS Obligations of Recovery Act Funds: $242 million. 

Fiscal year quarter: Q3 FY10; 
HHS Obligations of Recovery Act Funds: $147.4 million. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

Most of the funds that HHS obligated under Recovery Act contract 
actions, about 83 percent, were obligated on existing contracts as 
shown in figure 8. Of the funds used for new contract actions, 76 
percent were obligated on contracts that were competed. Of the 
obligations on noncompetitive new contract actions, 58 percent were on 
actions awarded noncompetitively because of the urgency of the 
agency's need, 22 percent were on actions for which only one source 
was available, 9 percent were on actions awarded noncompetitively 
under SBA's 8(a) program, and 2 percent were on actions 
noncompetitively awarded under simplified acquisition procedures. 

Figure 8: Percentage of HHS Obligations Competed and Types of 
Noncompetitive Actions as of May 12, 2010: 

[Refer to PDF for image: pie-chart and subchart] 

Contract obligations: 
Existing contracts: 83%; 
New contracts: 17%: 
* Competed: 76%; 
* Noncompeted: 24%: 
- Urgency: $30 million; 
- Sole or unique source: $11 million; 
- 8(a) sole source: $5 million; 
- Other: $4 million; 
- Simplified acquisition procedures: $1 million. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

Observations from the Site Review at NIH: 

We selected NIH for our contract file review as it had the largest 
amount of noncompetitive Recovery Act actions in numbers and dollars. 

The most common reason for not competing the award of a contract was 
that there was only one source available. This occurred on contracts 
for new medical and laboratory equipment for which only one business 
could meet the requirements of the contract. Only one source available 
was listed on contracts for equipment and software upgrades. In these 
cases, the program and contracting offices decided that it was more 
practical to upgrade the existing equipment than it was to purchase 
new equipment. These upgrades were only available through the 
manufacturer of the equipment and were therefore not competed. The 
contract files included market research that did not identify 
alternative sources or comparable price quotes for similar items. 

Table 7 provides additional details on some noncompetitive contract 
actions we reviewed at NIH. These examples illustrate the variety of 
services and supplies being acquired, the amount of Recovery Act 
funding used, and the reason a contract action was not competed. 

Table 7: Examples of Noncompetitive Recovery Act Contract Details from 
the HHS NIH Site Review: 

Purpose: Upgrades to existing medical diagnostic imaging systems 
needed by NIH for improved radiological clinical diagnosis; 
Recovery Act funding: $144,480; 
Reason contract action was not competed or is considered not 
competed[A]: Only one source available; 
Notes: It was determined through a market survey and market research 
that only the original business could meet the requirements to upgrade 
the workstation previously acquired. Using another business would 
require purchase of a new workstation which would not be cost 
effective or beneficial to the government. 

Purpose: Purchase of equipment needed by NIH to prepare plate samples 
as part of genome sequencing research; 
Recovery Act funding: $7,216; 
Reason contract action was not competed or is considered not 
competed[A]: Only one source available; 
Notes: It was determined through market research that the business has 
the only equipment and supplies with the minimum requirements that are 
essential to the government's research. 

Purpose: Software upgrades to an existing workstation needed by NIH 
for diagnostic oncology; 
Recovery Act funding: $67,780; 
Reason contract action was not competed or is considered not 
competed[A]: Only one source available; 
Notes: The business is the only source capable of providing an upgrade 
to the proprietary software and hardware. Two other businesses 
provided demonstrations of their software, but confirmed that the 
existing workstation is proprietary and they cannot provide an upgrade. 

Purpose: Purchase of equipment for imaging at sub-micron resolution in 
large numbers of cells and to provide analysis at both single cell and 
population levels; 
Recovery Act funding: $419,000; 
Reason contract action was not competed or is considered not 
competed[A]: Only one source available; 
Notes: After performing a market survey and obtaining price quotes for 
comparable equipment, it was determined that the comparable equipment 
could not meet requirements. 

Purpose: Upgrades to systems used for grants management and business 
operations software, including modifications to enable Recovery Act 
reporting; 
Recovery Act funding: $49,900; 
Reason contract action was not competed or is considered not 
competed[A]: Only one source available; 
Notes: This business was awarded the contract in part because the 
business had personnel who were involved in the original development 
of the systems. 

Purpose: Support for reviewing Recovery Act-funded grants at the 
National Institute of Child Health and Human Development and the 
National Institute on Alcohol Abuse and Alcoholism; 
Recovery Act funding: $189,000; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: The business was awarded the contract in part because it 
provides scientific review officers with extensive experience in the 
field of drug abuse and alcohol abuse research administration. 

Purpose: Hardware and software upgrade to equipment used for patient 
image archiving; 
Recovery Act funding: $802,532; 
Reason contract action was not competed or is considered not 
competed[A]: Only one source available; 
Notes: The business was awarded the contract in part because it is the 
only source that can upgrade components to the existing system that it 
originally built for NIH several years ago for storing patient image 
data. 

Source: GAO analysis of NIH contract documents. 

[A] Modifications or task orders on noncompetitive contracts existing 
prior to enactment of the Recovery Act are considered noncompetitive. 

[End of table] 

Agency Contracts Requiring Justifications for Noncompetitive Awards: 

Using FPDS-NG data as of February 19, 2010, we identified four 
contracts at HHS--three awarded at the Centers for Disease Control and 
Prevention and one at NIH--that required a documented justification 
and approval for using other than full and open competition. In each 
case, the contractor was selected on a noncompetitive basis because 
there was only one source available that could fully meet project 
requirements. For example, on an NIH contract for the upgrade of a 
system that stores pictures generated by medical imaging devices, it 
was determined that the incumbent contractor was the only source 
capable of meeting the contract requirements as it had important 
institutional knowledge and access to a proprietary system, and no 
other sources could be found. While one other source offered a 
competing proposal, it was to replace the system rather than upgrading 
the existing system, a less-cost efficient and time-consuming 
alternative, according to agency officials. 

Agency Contract Oversight: 

HHS efforts to provide oversight and transparency for Recovery Act 
activities include internal coordination, increased reporting to 
management, and recipient reporting. 

Coordination: HHS has established an Office of Recovery Act 
Coordination (ORAC) which coordinates with relevant business 
management functions, such as public affairs, grants and contract 
management, financial management, budget, planning and evaluation, 
information technology, and the Office of the General Counsel. It also 
coordinates with the offices that manage appropriated funds and 
programs authorized under the Recovery Act. In addition to acting as 
the central repository for data, policies, and procedures related to 
the Recovery Act, ORAC prepares executive-level reports that portray 
the overall status of Recovery Act implementation based on individual 
project and activity plans. ORAC also identifies the key tasks, 
milestones, and activities for each project plan that require 
coordination with HHS program and business functions. 

Additional review: NIH has established a process early in the 
acquisition planning stage for contracts using Recovery Act funds 
whereby a summary of the requirement, including any justifications for 
noncompetitive acquisitions, is reviewed and approved by various 
senior representatives to ensure that the requirement meets the intent 
of the Recovery Act and that the justification is supported. This 
document is called a Proposed Recovery Act Contract Action Approval 
Form. NIH contracting staff use a checklist in each contract to ensure 
that the files are complete and comply with Recovery Act requirements. 
NIH also developed detailed guidance that complements and expands 
guidance issued by OMB. All contract actions at NIH funded in whole or 
in part by the Recovery Act are subject to this guidance. Included in 
this guidance are additional oversight mechanisms and measures related 
to use of noncompetitive acquisitions. 

IG Contract Oversight: 

The Recovery Act provided the HHS IG with $17 million in funding for 
oversight and review and an additional $31,250,000 for ensuring the 
proper expenditure of funds under Medicaid. As of May 2010, the HHS IG 
has used $4.8 million of these funds. 

According to the HHS IG, internal risk assessments determined that the 
areas of greatest risk were the grant awards of the Administration for 
Children and Families (which is administering grant funds for expanded 
Head Start programs, among other programs) and the Health Resources 
and Services Administration, particularly those related to community 
health center grants. Accordingly, HHS IG officials are focusing their 
oversight efforts on these agencies. 

By contrast, HHS IG officials determined that contracting activities, 
such as those we reviewed at NIH, are of comparatively lower risk. 
Efforts are presently focused on the identified high-risk departments 
and programs. While the HHS IG plans to review Recovery Act spending 
at colleges and universities in fiscal year 2011, these reviews will 
focus on compliance with grant terms. 

National Aeronautics and Space Administration: 

NASA's mission is to pioneer the future in space exploration, 
scientific discovery and aeronautics research. 

Key Recovery Act Programs: 

NASA received approximately $1 billion in Recovery Act funds, 80 
percent of which were used for Science and Exploration programs, 15 
percent for Aeronautics programs, and 5 percent for cross-agency 
support programs which include restoration of NASA-owned facilities 
damaged by hurricanes and other natural disasters that occurred during 
calendar year 2008. NASA program areas receiving Recovery Act funding 
are listed in table 8. 

Table 8: NASA Recovery Act Funds Allocation: 

Program area: Science; 
Recovery Act funding: $400 million; 
Purpose: Accelerate the development of the Tier 1 set of Earth Science 
climate research missions and increase the agency's supercomputing 
capabilities. 

Program area: Exploration; 
Recovery Act funding: $400 million; 
Purpose: Maintain initial operational capability date for the Ares-1 
and Orion projects and to retain and/or increase the number of jobs, 
particularly in engineering, analysis, design, and research; 
stimulate efforts within the private sector to develop and demonstrate 
human spaceflight capabilities. 

Program area: Aeronautics; 
Recovery Act funding: $150 million; 
Purpose: Undertake systems-level research, development and 
demonstration activities related to aviation safety, environmental 
impact mitigation, and the Next Generation Air Transportation System. 

Program area: Cross-agency support; 
Recovery Act funding: $50 million; 
Purpose: Restore NASA-owned facilities damaged by hurricanes and other 
natural disasters that occurred during calendar year 2008. 

Source: NASA. 

[End of table] 

Recovery Act Spending: 

Nearly half of NASA's Recovery Act contracting funds were obligated in 
the fourth quarter of fiscal year 2009. Figure 9 shows NASA 
obligations of Recovery Act funds through contracts by fiscal quarter. 

Figure 9: NASA Obligations of Recovery Act Funds through Contracts, by 
Fiscal Quarter: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year quarter: Q3 FY09; 
NASA Obligations of Recovery Act Funds: $8 million. 

Fiscal year quarter: Q4 FY09; 
NASA Obligations of Recovery Act Funds: $433 million. 

Fiscal year quarter: Q1 FY10; 
NASA Obligations of Recovery Act Funds: $190 million. 

Fiscal year quarter: Q2 FY10; 
NASA Obligations of Recovery Act Funds: $201 million. 

Fiscal year quarter: Q3 FY10; 
NASA Obligations of Recovery Act Funds: $58.6 million. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

Most of the funds that NASA obligated under Recovery Act contract 
actions, about 89 percent, were obligated on existing contracts as 
shown in figure 10. Of the funds obligated for new actions, over 79 
percent were obligated on contracts that were competed. For the 
noncompetitive new contract obligations, 64 percent were on actions 
awarded noncompetitively under SBA's 8(a) program, 33 percent were on 
actions awarded noncompetitively because there was only one source 
available, and 3 percent were on actions noncompetitively awarded 
under simplified acquisition procedures. 

Figure 10: NASA Recovery Act Obligations Competed and Types of 
Noncompetitive Actions as of May 12, 2010: 

[Refer to PDF for image: pie-chart and subchart] 

Contract obligations: 
Existing contracts: 89%; 
New contracts: 11%: 
* Competed: 79%; 
* Noncompeted: 21%: 
- 8(a) sole source: $13.5 million; 
- Only one source: $6.9 million. 
- Other: $0.5 million. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

Observations from the Site Review at NASA Johnson Space Center: 

We reviewed 10 noncompetitive Recovery Act contract actions awarded by 
the NASA Johnson Space Center (JSC). The largest single obligation of 
Recovery Act funds that we reviewed at NASA was a $15 million 
modification (change order) to an existing noncompetitive contract in 
support of Common Docking Adapter development for the International 
Space Station. Six contract actions in our sample were new contracts 
to 8(a) program businesses to provide a variety of construction 
services, repair services, or both at JSC. NASA cited the Recovery Act 
guidance directing agencies to take advantage of any authorized small 
business contracting program as its reason for selecting these 
businesses. Prior to selecting these businesses, the agency performed 
market research and coordinated with SBA to identify a potential pool 
of 8(a) program businesses. NASA then held capability briefings with 
those businesses from which award selections were made. Finally, there 
were three orders using an existing, originally noncompetitive 
contract to an 8(a) program business for construction oversight 
administration services at JSC. 

Table 9 provides additional details on some noncompetitive contract 
actions we reviewed at JSC. These examples illustrate the variety of 
services and supplies being acquired, the amount of Recovery Act 
funding used, and the reason a contract action was not competed. 

Table 9: Examples of Noncompetitive Recovery Act Contract Details from 
the NASA JSC Site Review: 

Purpose: Cross-agency placement and administration support services 
for construction contracts authorized under the Recovery Act; 
Recovery Act funding: $242,696; 
Reason contract action was not competed or is considered not 
competed[A]: Task order on an existing noncompetitive contract; 
Notes: The task order was issued using an existing blanket purchase 
agreement with a small, women-owned business. The task order was 
modified to comply with Recovery Act coding requirements. 

Purpose: Replace carpets at a JSC facility; 
Recovery Act funding: $82,579; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: The business is a woman-owned small business and had experience 
replacing carpets at the University of Texas. 

Purpose: Cleaning and sealing of panels along with caulking of all 
joints on the exterior of the buildings; 
Recovery Act funding: $3,391,619; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: The business had experience caulking under prior contracts with 
Harris County, Texas. 

Purpose: Demolition and removal of existing roof and installation of 
new roofing system at a JSC facility; 
Recovery Act funding: $1,817,433; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: The business had recent experience successfully completing two 
roofing projects at JSC. 

Purpose: Phase II development of the International Space Station 
Common Docking Adapter; 
Recovery Act funding: $15,000,000; 
Reason contract action was not competed or is considered not 
competed[A]: Modification to an existing noncompetitive contract; 
Notes: The business was determined to be uniquely qualified to perform 
the project because it had solely developed and integrated the 
International Space Station. Modifying the existing contract was 
determined to be the most appropriate contract vehicle for the 
preservation of jobs using Recovery Act funds. The Recovery Act funded 
effort was a separate, cost-reimbursable, performance-based fee 
contract line item that was placed on the existing cost-plus-award-fee 
contract. 

Purpose: Design and construction of an open-sided metal hangar that 
shall provide a covered area for limited aircraft maintenance and 
overhead protection for aircraft and ground support equipment; 
Recovery Act funding: $3,388,000; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: The business had recent experience renovating an aircraft 
hangar at a U.S. Naval base. 

Purpose: Replacement of aging and deteriorating pedestrian light 
poles, foundations, and light fixtures at JSC that show physical 
damage from Hurricane Ike; 
Recovery Act funding: $774,099; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: This business demonstrated recent experience on concrete and 
street repair projects and performed contracts at JSC and with other 
federal agencies. 

Purpose: Replacement of the windows and related gaskets at a JSC 
facility; 
Recovery Act funding: $2,830,879; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: The business was a local business with experience on high-rise 
construction projects. 

Source: GAO analysis of NASA contract documents. 

[A] Modifications or task orders on noncompetitive contracts existing 
prior to the enactment of the Recovery Act are considered 
noncompetitive. 

[End of table] 

Agency Contracts Requiring Justifications for Noncompetitive Awards: 

In a review of FPDS data as of February 19, 2010, we identified one 
new NASA contract that required a documented justification and 
approval for use of a noncompetitive award. According to the 
justification for this contract, only one source was available for 
specific electronic systems because only one business had developed a 
spaceflight-appropriate version of the technology. 

Agency Contract Oversight: 

NASA efforts to provide oversight and transparency of Recovery Act- 
funded efforts include internal coordination, issuing guidance to the 
procurement community on the implementation of the Recovery Act, a 
prohibition on commingling of funds, greater reporting to senior 
management, and recipient reporting. There are weekly meetings of NASA 
oversight and contracting officials to coordinate Recovery Act 
efforts. In addition, the agency developed an internal online file 
management system that stores Recovery Act-related contract files and 
can be accessed by agency officials. 

NASA issued Procurement Information Circular 09-06E to provide 
guidance to the procurement community on the implementation of the 
Recovery Act. The guidance provides instruction on a range of Recovery 
Act contracting topics including requisition requirements for 
initiating procurement actions, pre-award considerations and 
contracting officer responsibilities, posting and reporting 
requirements for contract actions, inclusion of new FAR clauses, 
instructions specific to construction contracts, and contractor 
invoicing procedures, among others. The circular also includes NASA's 
process for reviewing contactor reporting under the Recovery Act. 

IG Contract Oversight: 

According to officials, the NASA IG is reviewing Recovery Act contract 
actions at selected NASA centers as appropriate; this will include two 
types of audits, one of the administration and implementation of the 
contract award and another of the performance of the contractor. 
Officials reported that the initial administrative audits of Recovery 
Act contract actions through November 2009 are complete at a number of 
the centers including Johnson, Goddard, Langley, and Ames. As of June 
2010, one contractor performance audit had been conducted. On July 1, 
2010, the NASA IG issued a draft report on the combined administrative 
audits for NASA management's review and comment. The NASA IG is 
releasing staggered performance reports and may issue a capping 
report, as necessary. 

The NASA IG conducted an initial review of the final NASA Agency-Wide 
Recovery Act Plan and identified several compliance issues with 
respect to fulfilling requirements of the OMB guidance. According to 
the NASA IG memorandum, NASA's Agency-Wide Recovery Act Plan provided 
insufficient detail about the agency's broad Recovery Act goals in 
terms of outputs, outcomes, and expected efficiencies. In addition, 
the plan did not include a projection of the expected rate of 
competition nor a rationale for those numbers, as required by OMB 
guidance. Lastly, the plan did not address the use of fixed-price 
contracts as a percentage of all dollars spent or describe the steps 
planned to maximize the use of fixed-price contracts where practicable 
for Recovery Act-funded contracts. The memorandum was submitted to 
NASA on December 17, 2009. In NASA management's response, received 
January 5, 2010, the Recovery Act Implementation Executive stated the 
agency concurred with the observations noted in this memorandum. 
According to NASA management's response, at the time that the Agency-
Wide Recovery Act Plan was due for submission to OMB, Congress had not 
concurred with NASA's proposed activities. NASA indicated in its plan 
that it would provide this additional information with plan updates. 

Small Business Administration: 

SBA's mission is to maintain and strengthen the nation's economy by 
aiding, counseling, assisting, and protecting the interests of small 
businesses. 

Key Recovery Act Programs: 

The Recovery Act provides $730 million to SBA that the agency is using 
to expand its lending and investment programs so that they can reach 
more small businesses that need help. While most of SBA's Recovery Act 
funds are used for loan programs, contracts are being awarded for 
equipment and services to support these programs. Specifically, SBA 
has allocated $20 million for improving technology. Most of the 
contract dollars are being spent in this area. SBA program areas 
receiving Recovery Act funding are listed in table 10. 

Table 10: SBA Recovery Act Funds Allocation: 

Program area: Loan programs; 
Recovery Act funding: $660 million; 
Purpose: Temporary elimination of fees on SBA-backed loans, a new loan 
program to help small businesses meet existing debt payments, and 
expansion of SBA's Microloan program. 

Program area: Technology; 
Recovery Act funding: $20 million; 
Purpose: Technology systems to streamline SBA's lending and oversight 
processes. 

Program area: Staffing and Recovery Act oversight; 
Recovery Act funding: $35 million; 
Purpose: Additional staffing to meet demands for new programs and 
funds for the SBA IG. 

Program area: Surety Bonds; 
Recovery Act funding: $15 million; 
Purpose: SBA's Surety Bond Guarantee program. 

Source: SBA. 

[End of table] 

Recovery Act Spending: 

Through May 2010, SBA has obligated approximately $11 million of its 
Recovery Act funds on contracts. SBA's quarterly obligations have 
fluctuated. According to an SBA procurement official, this was 
generally because of the award of large, individual contracts. Figure 
11 shows SBA obligations of Recovery Act funds through contracts by 
fiscal quarter. 

Figure 11: SBA Obligations of Recovery Act Funds through Contracts, by 
Fiscal Quarter: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year quarter: Q3 FY09; 
SBA Obligations of Recovery Act Funds: $2.31 million. 

Fiscal year quarter: Q4 FY09; 
SBA Obligations of Recovery Act Funds: $3.33 million. 

Fiscal year quarter: Q1 FY10; 
SBA Obligations of Recovery Act Funds: $1.14 million. 

Fiscal year quarter: Q2 FY10; 
SBA Obligations of Recovery Act Funds: $3.79 million. 

Fiscal year quarter: Q3 FY10; 
SBA Obligations of Recovery Act Funds: $5.79 million. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

SBA's use of existing and competed contracts was very different from 
the other agencies we reviewed. Most of the funds that SBA obligated 
under Recovery Act contract actions, about 76 percent, were obligated 
on new contracts, as shown in figure 12 below. For the noncompetitive 
new contract obligations, 76 percent were on actions awarded 
noncompetitively under SBA's 8(a) program, 3 percent were on actions 
awarded noncompetitively under simplified acquisition procedures, and 
3 percent were on actions awarded noncompetitively because there was 
only one source available. Two percent of new contracts were awarded 
competitively. 

Figure 12: SBA Recovery Act Obligations Competed and Types of 
Noncompetitive Actions as of May 12, 2010 (Dollars in Millions): 

[Refer to PDF for image: pie-chart and subchart] 

Contract obligations: 
Existing contracts: 24%; 
New contracts: 76%: 
* Competed: 2%; 
* Noncompeted: 98%: 
- 8(a) sole source: $6.3 million; 
- Other: $1.5 million;
- Only one source: $0.2 million; 
- Simplified acquisition procedures: $0.2 million. 

Source: GAO analysis of Federal Procurement Data System-Next 
Generation data as of May 12, 2010. 

[End of figure] 

Observations from the Site Review at SBA: 

SBA is primarily using Recovery Act contracts to train, supply, and 
equip staff to support other Recovery Act-related activities. Most of 
SBA's Recovery Act contract dollars were obligated on contracts to 
8(a) program businesses. 

Consistent with the fact that agencies are not required to justify in 
writing the use of noncompetitive contracting procedures for 8(a) 
program contracts, these contract files were not required to contain a 
justification document related to awarding a noncompetitive contract. 
However, the files contained documentation that described the use of 
the 8(a) program and included competitors' quotes to establish price 
reasonableness. 

Table 11 provides additional details on some noncompetitive contract 
actions we reviewed at the SBA. These examples illustrate the variety 
of services and supplies being acquired, the amount of Recovery Act 
funding used, and the reason a contract action was not competed. 

Table 11: Examples of Noncompetitive Recovery Act Contract Details 
from the SBA Office of Business Operations Site Review: 

Purpose: Advertising and marketing services for Recovery Act programs; 
Recovery Act funding: $491,457; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: Awarded to an American Indian-owned small business. 

Purpose: Program management and information technology services to 
support pilot deployment of a system that maintains lender, small 
business, and partner data; 
Recovery Act funding: $1,287,701; 
Reason contract action was not competed or is considered not 
competed[A]: Task order on a pre-Recovery Act noncompetitive contract; 
Notes: This task order was issued off of an existing IDIQ contract to 
8(a) program business. 

Purpose: A centralized commercial loan credit sourcing program; 
Recovery Act funding: $245,391; 
Reason contract action was not competed or is considered not 
competed[A]: Modification on a pre-Recovery Act noncompetitive 
contract; 
Notes: This modification was issued off of an existing contract to 
8(a) program business. 

Purpose: An assessment of the Surety Bond Guarantee Program under the 
Recovery Act; 
Recovery Act funding: $35,976; 
Reason contract action was not competed or is considered not 
competed[A]: Modification on a pre-Recovery Act noncompetitive 
contract; 
Notes: This modification was issued off of an existing contract to 
8(a) program business. 

Purpose: Procuring software to perform Customer Relationship 
Management and data warehousing functions; 
Recovery Act funding: $1,827,567; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: The business selected for the contract was the only eligible 
8(a) program business to submit a price quote. 

Purpose: Wide Area Network optimization or acceleration technology 
solutions and associated implementation services; 
Recovery Act funding: $843,027; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: In seeking a business to perform this work, SBA performed 
market research to identify businesses that could provide the most 
appropriate technology solution possible while promoting the use of an 
8(a) program business. 

Purpose: Acquisition and procurement support at SBA headquarters, 
including assistance with Recovery Act reporting requirements; 
Recovery Act funding: $123,696; 
Reason contract action was not competed or is considered not 
competed[A]: Modification on a pre-Recovery Act noncompetitive 
contract; 
Notes: It was determined that SBA had a continuing need for this 
support and therefore exercised an option year on a contract to an 
8(a) program business. 

Purpose: Software and services for the Customer Relationship 
Management suite of applications; 
Recovery Act funding: $71,122; 
Reason contract action was not competed or is considered not 
competed[A]: 8(a) program - under $3.5 million; 
Notes: SBA conducted market research and found that the items were not 
available under General Services Administration schedules. 

Purpose: Provide training for Microloan intermediaries; 
Recovery Act funding: $84,556; 
Reason contract action was not competed or is considered not 
competed[A]: Only one source available; 
Notes: This contract was awarded under simplified acquisition 
procedures. 

Source: GAO analysis of SBA contract documents: 

[A] Modifications or task orders on noncompetitive contracts existing 
prior to Recovery Act are considered noncompetitive. 

[End of table] 

Agency Contracts Requiring Justifications for Noncompetitive Awards: 

In a review of FPDS data as of February 19, 2010, we did not identify 
any new, noncompetitive SBA contracts requiring a documented 
justification and approval for being awarded noncompetitively. 

Agency Contract Oversight: 

SBA efforts to provide oversight and transparency for Recovery Act 
activities include increased legal review of contract awards and 
recipient reporting. 

SBA has experienced a significant decrease in its acquisition 
workforce and has contracted out for contract specialists. 

SBA includes a legal review for all Recovery Act contract awards. This 
review is not required for every non-Recovery Act award. 

Inspector General Contract Oversight: 

The SBA IG has received $10 million in Recovery Act funds for 
oversight. The SBA IG's Recovery Act Oversight Plan highlighted 
numerous efforts related to SBA's contract administration practices, 
and oversight of Recovery Act loans and grants. In the contracting 
area, the SBA IG's focus was on examining the award and administration 
of $20 million in information technology contracts, and evaluating the 
adequacy of SBA's acquisition workforce, expenditure controls, and 
reporting of contract actions. In October 2009, the SBA IG added three 
staff members to its contract audit group to provide additional audit 
coverage of the procurement function. 

The SBA IG has issued a memorandum to SBA's acquisition office 
regarding their dramatic shortages in acquisition staff noting that 
the staff decreased from 13 to 5 staff members in a short period of 
time, straining the acquisition office's ability to issue and provide 
oversight of Recovery Act contracts. 

The SBA IG issued a report noting that there are numerous 
discrepancies in the way that actions are being recorded in the FPDS-
NG. The SBA IG also issued another report that identified problems 
with acquisition planning and eligibility for 8(a) program businesses 
associated with two contracts for the Customer Relationship Management 
suite of applications (see table 11). 

[End of section] 

Appendix III: Objectives, Scope, and Methodology: 

Objectives: 

GAO was asked to examine noncompetitive contract awards under the 
American Recovery and Reinvestment Act of 2009 (Recovery Act). In 
response, we conducted a review to determine: 

* the extent to which Recovery Act funding was spent using contracts, 
and to what extent these contract actions were awarded 
noncompetitively; 

* the reasons selected federal agencies awarded noncompetitive 
Recovery Act contracts; 

* the extent of oversight of Recovery Act contract actions at selected 
federal agencies; and: 

* state officials' level of insight into the use of noncompetitive 
Recovery Act contracts within selected states. 

Scope and Methodology: 

We analyzed Federal Procurement Data System--Next Generation (FPDS-NG) 
data to determine the extent to which Recovery Act funding was 
obligated through contract actions across the federal government. 
[Footnote 36] We determined that the FPDS-NG data were sufficiently 
reliable for the purposes of this review by comparing the information 
for selected agencies with information from other sources, including 
agency contract data and information in contract files at selected 
locations.[Footnote 37] As part of this analysis, we determined the 
amount of Recovery Act obligations under new and existing contract 
vehicles, as reported in FPDS-NG. Actions on the same underlying 
contract were grouped together; orders and modifications to contracts 
awarded after enactment of the Recovery Act were counted as occurring 
under new contracts, while orders and modifications to contracts that 
predated the Recovery Act were counted as existing contracts. 

For our second and third objectives, we used FPDS-NG data to select 
five agencies for more extensive review: 

* Department of Defense (DOD): 

* Department of Energy (DOE): 

* Department of Health and Human Services (HHS): 

* National Aeronautics and Space Administration (NASA): 

* Small Business Administration (SBA): 

These agencies were identified on the basis of the volume, dollar 
value, and percentage of noncompetitive contract actions on which they 
obligated Recovery Act funds, according to data drawn from FPDS-NG on 
February 19, 2010. The size of the agencies was also considered. 

Within each of the five agencies, we selected one contracting office 
at which we reviewed contract files for noncompetitive Recovery Act 
contract actions. As with the agencies, we chose these locations based 
on the volume, dollar value, and percentage of noncompetitive Recovery 
Act contract actions. The types of contract awards made at each 
location were also considered. The five contracting offices selected 
were: 

* the U.S. Army Corps of Engineers (USACE) Sacramento District at DOD, 

* the Office of Environmental Management Consolidated Business Center 
at DOE, 

* the National Institutes of Health (NIH) at HHS, 

* the Johnson Space Center at NASA, and: 

* the Office of Business Operations at SBA. 

At each contracting office, we reviewed all noncompetitive contract 
actions awarded or issued using Recovery Act funds, about 150 actions 
in total. Because GAO and others have previously identified 
shortcomings in FPDS-NG, we also asked agency officials to verify the 
accuracy and completeness of our lists of noncompetitive contract 
actions before our site visits. For each contract file, we reviewed 
basic information on the contract award, such as the obligation 
amount, as well as information on the award process, such as the 
reason the contract was awarded noncompetitively. These reviews were 
conducted on-site, except for that of NASA's Johnson Space Center, for 
which we reviewed electronic versions of the contract files. We also 
interviewed agency contracting officials at each location regarding 
issues related to the contract files included in our review as well as 
contracting under the Recovery Act as a whole. 

In addition, using FPDS-NG data, we identified all new Recovery Act 
contracts at the selected agencies that required documented 
justifications and approvals authorizing the use of a noncompetitive 
contracting approach, as of February 19, 2010. We limited our search 
to new contracts with an award type of "Definitive Contract" in FPDS-
NG, and selected for review all those where the amount obligated 
exceeded typical thresholds for requiring a documented justification--
$3.5 million for contracts with 8(a) program businesses, and $100,000 
in most other cases. For each of the contracts, we obtained and 
reviewed materials from the contract files related to the 
justification for the noncompetitive award. 

For each of the five selected federal agencies, we gathered 
information on Recovery Act contracting oversight from interviews with 
relevant officials, and reviews of relevant policies, reports, and 
other documents. We obtained similar information from the agencies' 
inspectors general (IG), including their audit plans related to 
Recovery Act contracting. We also reviewed and analyzed applicable 
findings the IGs have made regarding management and oversight of 
Recovery Act contracting. 

To determine the level of insight that state officials have into the 
use of noncompetitive Recovery Act contracts, we selected five states--
California, Colorado, Florida, New York, and Texas--based on the 
amount of Recovery Act funds reported as being awarded via contracts 
on www.Recovery.gov and our goal of providing information on a variety 
of geographic locations.[Footnote 38] These states account for more 
than half of the Recovery Act funds awarded by contract at the state 
level for the 16 states that we are monitoring as part of our 
mandatory reporting on Recovery Act issues. For each state, we 
discussed with the appropriate state officials--including 
representatives from the governors offices, state procurement offices, 
and audit organizations--the extent to which the states have awarded 
noncompetitive Recovery Act contracts, the reasons why they did not 
use competition, and the level of oversight the states provide for 
these contracts.[Footnote 39] Additionally, we discussed these issues 
with representatives of the state agencies that manage the education 
and weatherization programs to obtain further understanding of how 
state agencies award and oversee contracts. It is important to note 
that states are not required to follow federal acquisition 
regulations, including those covering the award of noncompetitive 
contracts. 

We conducted this performance audit from February 2010 to July 2010, 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix IV: Comments from the Department of Defense Inspector General: 

Inspector General: 
Department Of Defense: 
400 Army Navy Drive: 
Arlington, Virginia 22202-4704: 

July 13, 2010: 

Mr. John K. Needham: 
Director: 
Acquisitions and Sourcing Management: 
U.S. Government Accountability Office: 
Washington. DC 20548: 

Dear Mr. Needham: 

This is the Department of Defense Inspector General (DoD IG) response 
to the Government Accountability Office draft report, "RECOVERY ACT: 
Contracting Approaches and Oversight at Selected Federal Agencies and 
States," dated July 9, 2010 (GAO Code 120886, GAO-10-809). 

The DOD IG agrees with the draft report and its recommendation. As 
part of our Phase 3 audit plan, we have updated our risk based 
analysis based on results found during our Phase 1 and Phase 2 reviews 
including our continuing coverage of future expected Recovery 
Accountability and Transparency Board referrals relating to 8(a) firms. 

We appreciate the opportunity to comment on the draft report. 

Sincerely, 

Signed by: 

Daniel R. Blair: 
Principal Assistant Inspector General for Auditing: 

[End of section] 

Appendix V: Comments from the Department of Energy Inspector General: 

Department of Energy: 
Washington, DC 20585: 

July 13, 2010: 

Mr. James Fuquay: 
Assistant Director: 
Government Accountability Office: 
Via email: (fuqua@gao.gov): 

Subject: Comments on the Draft Government Accountability Office Report: 
Recovery Act: Contracting Approaches and Oversight at Selected Federal 
Agencies and States (GAO-10-809): 

Mr. Fuquay: 

The Office of Inspector General appreciates the opportunity to comment 
on the subject report. As we explained during our meetings with GAO 
officials and as recognized in your draft report, the Office of 
Inspector General employs a risk-based approach in determining how to 
best use taxpayer furnished resources. For the Recovery Act, as with 
all funds appropriated to the U.S. Department of Energy, we consider a 
number of factors in determining where to apply our scarce audit 
resources, not the least of which is the form and substance of the 
contracting vehicle employed. 

The U.S. Department of Energy is one of the most contractor dependent 
agencies in the government. As a result, we incorporate the 
examination of applicable contract instruments into each of our 
audits. Regarding our Recovery Act strategy, we considered the subject 
area during the completion of our risk assessment. However, as your 
report states, we did not identify contracting as a Recovery Act high 
risk area. One of the primary reasons was that the Department used a 
significant portion of its Recovery Act funds to award grants, with 
virtually all of the remainder dedicated to accelerating approved 
scopes of work on existing contracts. As GAO notes in the Appendix to 
its draft, less than one percent of funding was devoted to newly 
awarded contracts, including those awarded to 8(a) firms. By virtually 
every reasonable test, such amount is immaterial to the more than $38 
billion in Recovery Act funding received by the Department. 

With respect to use of Recovery Act funding, the GAO is correct in 
stating that OIG spending has not reached anticipated levels. However, 
the draft report fails to recognize that this was directly tied to 
delays in the Department's program start/scale-up. As we have 
identified in recently issued and several in-progress reviews, 
significant spending by the Department on a number of major Recovery 
Act projects/activities had only recently begun. As of June 30, 2010, 
however, we had obligated about $6.2 million and expended over $1.7 
million of the $15 million we were provided in Recovery Act funds. We 
anticipate that our spending rate will significantly increase in the 
near term as the OIG is currently using contract independent public 
accountants and Federal Recovery Act specific employees to provide 
support for a significant number of audits at the state and local 
level. 

Finally, the report recommends that as we revisit and revise our 
Recovery Act audit plans, that we should assess the need for 
allocating an appropriate level of audit resources, as determined
using our risk-based analysis, to non-competitive contracts awarded 
under the 8(a) program. We do not disagree with the fundamental 
premise of the recommendation; however, we do not believe that the 
facts in this case provide a basis for it. As a matter of practice, we 
routinely consider contracts of this nature and have completed a 
number of audits in this area in the past. In fact, our Fiscal Year 
2011 plan includes an audit start in this very area. 

Should you have questions or desire to discuss the contents of our 
response, please contact me at 202-586-1949. 

Signed by: 

Rickey R. Hass: 
Deputy Inspector General for Audit Services: 
Office of Inspector General: 
U.S. Department of Energy: 

CC: Tom Griffin, CF: 
Diane Williams, CF: 
Jacqueline Kniskern, MA: 

[End of section] 

Appendix VI: Comments from the National Aeronautics and Space 
Administration Inspector General: 

National Aeronautics and Space Administration: 
Office of Inspector General: 
Washington, DC 20546-0001: 

July 15, 2010: 

Mr. James Fuquay: 
Assistant Director: 
U.S. Government Accountability Office: 
Washington, D.C. 20548: 

Dear Mr. Fuquay: 

Thank you for the opportunity to comment on the draft report, 
"Recovery Act: Contracting Approaches and Oversight at Selected 
Federal Agencies and States" (GA0-10-809), provided July 9, 2010. The 
report recommends that the inspectors general of the five Federal 
agencies reviewed assess the risks associated with the Small Business 
Administration's 8(a) program as they move forward with Recovery Act 
audit plans. 

We concur with the recommendation and plan to assess the need for 
allocating an appropriate level of audit resources to the non-
competitive contracts awarded under the 8(a) program. In fact, we 
expect to begin an audit on NASA's achievement of Recovery Act 
milestones under the cross-Agency support contracts at Johnson Space 
Center. At least seven NASA contracts that we will be reviewing in 
this audit were awarded under the 8(a) program. 

Please express my appreciation to your staff for their time, 
dedication, and professionalism. If you or your staff would like to 
meet with us to discuss this matter further, please contact Jim 
Morrison, Assistant Inspector General for Audits, at 202-358-0378. 

Sincerely, 

Signed by: 

Paul K. Martin: 
Inspector General: 

[End of section] 

Appendix VII: Comments from the Small Business Administration: 

U.S. Small Business Administration: 
Washington, D.C. 20416: 

July 14, 2010: 

John K. Needham, Director: 
Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, DC 20548: 

Dear Mr. Needham: 

The U.S. Small Business Administration appreciates the opportunity to 
provide comments on the Government Accountability Office's (GAO) 
report number GA0-10-809, entitled "Recovery Act: Contracting 
Approaches and Oversight at Selected Federal Agencies and States." The 
SBA is committed to working with agencies and small businesses to meet 
the statutory small business contracting goals and providing 
meaningful contracting assistance and business development 
opportunities to all small businesses. At the same time, the agency is 
committed to ensuring that its programs operate free of fraud, waste, 
and abuse. 

Especially in this challenging economic environment for small 
businesses, the 8(a) program provides critical business development 
opportunities for socially and economically • disadvantaged small 
business owners. One of the SBA's primary goals is to ensure that the 
benefits of the 8(a) program, including contracting assistance, flow 
to the program's intended recipients. It is for this reason that the 
SBA is concerned about some of the suggestions made about the 8(a) 
program in this GAO report. 

The report attempts to link agencies' legitimate use of the 8(a) 
program through the Recovery Act to a previous forensic audit of the 
8(a) program, GAO 10-425, "8(a) Program: Fourteen Ineligible Firms 
Received $325 Million in Sole-Source and Set-Aside Contracts". This 
report implies that contracts awarded through the 8(a) Business 
Development program are more susceptible to fraud than other types of 
contracts, and that the Inspector General's offices at agencies should 
have more closely reviewed these contracts simply because they were 
awarded through the 8(a) program. 

As part of the agency's comprehensive approach to reducing fraud, 
waste, and abuse in its programs, the SBA has taken significant steps 
in each of the 8(a) program's three stages of compliance — upfront 
certification, ongoing monitoring, and rigorous enforcement. Many of 
the agency's efforts have progressed significantly since the March 
2010 release of the forensic audit, and as a result of the SBA's 
actions, the 8(a) program will better deliver benefits to its intended 
recipients. 

In the area of upfront certification, the SBA has carefully examined 
its certification procedures through its first comprehensive review of 
8(a) regulations in over ten years. The agency has collected comments 
from stakeholders and has held two tribal consultations and events in 
ten cities in order to solicit a broad array of feedback. The agency 
is currently reviewing all comments, and will issue its revised 
regulations later this year. 

In addition to revising 8(a) regulations, the SBA has also taken 
additional steps to ensure firms' ongoing compliance. Consistent with 
the GAO's recommendations in its previous forensic audit, content 
experts in the SBA's Offices of Field Operations and Government 
Contracting & Business Development have been developing a 
comprehensive curriculum for all Business Development Specialists. 
This training will focus on conducting more effective annual reviews, 
resolving key eligibility issues, utilizing site visits more 
effectively, and supporting staff in other key aspects so that SBA can 
provide meaningful business development and reduce fraud, waste, and 
abuse in the 8(a) program. 

As part of its commitment to rigorous enforcement, the SBA has also 
worked closely with both its Office of Inspector General and the 
Department of Justice to review 8(a) firms suspected of fraud. The SBA 
is currently reviewing the eligibility of those firms that were 
suspected of fraud in the previous GAO report, while also ensuring 
that these firms receive their due process. Although the SBA is 
investigating the firms included in the prior GAO report's findings, 
it is possible that not every company identified was acting 
inappropriately. More broadly, based on the results of any 
investigation, the SBA and the appropriate authorities are committed 
to pursuing all appropriate courses of action — whether suspension, 
debarment, or prosecution — against rims that have fraudulently 
obtained government contracts through its programs. 

Finally, while it is a priority for the SBA to rid all of its programs 
of waste, fraud, and abuse, it is important to keep the findings of 
the prior GAO report in context. The prior GAO report references $17 
million in Recovery Act contracts that were given to companies that 
potentially acted fraudulently. While this figure is concerning to the 
SBA, this amount represents less than 1 percent of the 8(a) program's 
annual contracting volume. Correlating the 8(a) program in its 
entirety with at-risk contracting through the Recovery Act is 
incomplete. 

Suggestions of wrong-doing without supporting evidence are detrimental 
to the 8(a) program and its thousands of eligible program 
participants. The 8(a) program is a legitimate business development 
tool with a contract vehicle that was enacted by Congress and was a 
viable procurement option for Recovery Act contracting. The SBA has 
taken significant steps to reduce fraud, waste, and abuse in the 8(a) 
program, and disputes this report's suggestion that the 8(a) program 
was an inappropriate or relatively risky procurement choice.
If you have any additional questions or comments, please feel free to 
contact me directly. 

Sincerely, 

Signed by: 
Joseph G. Jordan: 
Associate Administrator: 
Office of Government Contracting and Business Development: 

[End of section] 

Appendix VIII: Comments from the State of Florida: 

State Of Florida: 
Office Of The Governor: 
Charlie Crist, Governor: 
The Capitol: 		
Tallahassee, Florida 32399-00111: 		
www.fl.gov.com: 
850-488-7146: 
850-487-0801 fax: 

July 13, 2010: 
			
Mr. James Fuquay, Assistant Director: 
Acquisition and Sourcing Management: 
United States Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Fuquay: 

The State of Florida Inspectors General have reviewed your proposed 
report entitled Recovery Act: Contracting Approaches and Oversight at 
Selected Federal Agencies and States (GAO-10809). 

We agree with the information presented in the report about Florida 
and therefore do not have any comments or concerns. 

We also would like to thank your staff for their efforts and cordial 
working relationship. If you need additional information, please 
contact Kim Mills, Director of Auditing, at (850) 922-4637. 

Sincerely, 

Signed by: 

[Illegible], for: 

Melinda M. Miguel: 
Chief Inspector General: 

[End of section] 

Appendix IX: Comments from the State of Texas: 

State of Texas: 
Office Of The Governor: 
Rick Perry, Governor: 
Post Office Box 12428: 
Austin, Texas 78711: 
(512) 463-2000 (Voice): 
Dial 7-1-1 For Relay Services: 
Visit: [hyperlink, http://www.TexasOnline.com] 

July 13, 2010: 

Mr. John K. Needham: 
Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, D.C. 20548: 

Dear Mr. Needham: 

Thank you for the opportunity to review and comment on the draft 
report, Recovery Act: Contracting Approaches and Oversight at Selected 
Federal Agencies and States (GAO-10-809), which includes Texas as one 
of five states reviewed. 

We suggest these changes: 

* On page 23 modify the second bullet point as follows: "Texas's state-
wide contract database does not identify which contracts are funded 
under the Recovery Act. However, the state does have a separate 
database to track Recovery Act awards made to state agencies and 
public institutions of higher education." 

* On page 25, 2nd paragraph: "At the state level—unlike the federal 
level—Congress provided no Recovery Act funds [strikeout text] were 
not specifically set aside [end strikeout] to states or their for 
state audit organizations to provide oversight [strikeout text] over 
the use of [end strikeout] Recovery Act funds." 

* On page 27 under "Recommendation" add this as the last sentence: 
"Congress should provide states the resources to accomplish the tasks 
that Congress has required of state and local governments." 

Texas remains committed to complying with the requirements of the Act. 
We look forward to continued work with the GAO on this effort. 

Sincerely, 

Signed by: 

Mike Morrissey: 
Senior Advisor: 
Office of the Governor: 

[End of section] 

Appendix X: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

John K. Needham, (202) 512-4841 or needhamjk1@gao.gov: 

Acknowledgments: 

In addition to the contact named above, William T. Woods, Director; 
James Fuquay, Assistant Director; Shea Bader; Noah Bleicher; M. Greg 
Campbell; MacKenzie Cooper; Alexandra Dew; R. Eli DeVan; Kevin Heinz; 
W. Keith Hudson; Julia Kennon; Jean K. Lee; Teague Lyons; Jean 
McSween; Norm Rabkin; Morgan Delaney Ramaker; and Russ Reiter all made 
contributions to this report. 

[End of section] 

Footnotes: 

[1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009). 

[2] For the purposes of this report, for federal agencies, we are 
defining non-competitive contracts to include contracts that were 
awarded using the exceptions to full and open competition in the 
Federal Acquisition Regulation (FAR), such as sole-source contracts 
awarded under the Small Business Administration's 8(a) program, as 
well as contracts awarded without competition under simplified 
acquisition procedures, as authorized by FAR § 13.106-1. For states, 
we are relying on the states' definitions of non-competitive contracts 
as discussed with state officials. As such, each state may have its 
own definition of a non-competitive contract. 

[3] FPDS-NG is a comprehensive, Web-based tool and database that 
functions as a clearinghouse of information for all federal contract 
actions, including non-competitive and competitive actions, exceeding 
the micro-purchase threshold, which in most cases is $3,000. 

[4] Our previous work, as well as the work of the federal Acquisition 
Advisory Panel, has identified limitations in the accuracy and 
timeliness of data in FPDS-NG. Both GAO and the Acquisition Advisory 
Panel have reported that while FPDS-NG has been the primary 
governmentwide contracting database for capturing and reporting on 
various acquisition topics, such as agency contracting actions and 
procurement trends, it has had data quality issues over a number of 
years. While FPDS-NG data are useful for providing insight, the data 
are not always accurate at the detailed level. However, no other 
viable alternative currently exits for obtaining governmentwide data 
on federal procurements. See GAO, Federal Contracting: Observations on 
the Government's Contracting Data Systems, [hyperlink, 
http://www.gao.gov/products/GAO-09-1032T] (Washington, D.C: Sept. 29, 
2009) and Federal Acquisition: Oversight Plan Needed to Help Implement 
Acquisition Advisory Panel Recommendations, [hyperlink, 
http://www.gao.gov/products/GAO-08-160] (Washington, D.C.: Dec. 20, 
2007). 

[5] The data reported on www.Recovery.gov represents the data reported 
by recipients of Recovery Act funds within the states. Our previous 
work has identified concerns with the quality of these data; however, 
this Web site is the only source of data available on states' Recovery 
Act contracting awards. See GAO, Recovery Act: States' and Localities' 
Uses of Funds and Actions Needed to Address Implementation Challenges 
and Bolster Accountability, [hyperlink, 
http://www.gao.gov/products/GAO-10-604] (Washington, D.C.: May 26, 
2010). 

[6] Recovery Act funds that were awarded directly to local 
governmental entities by federal agencies and bypassed state agencies 
were not included in the scope of our state-level work addressing 
oversight. These funds would include formula and discretionary grant 
programs. 

[7] Office of Management and Budget, "Initial Implementing Guidance 
for the American Recovery and Reinvestment Act of 2009," M-09-10, 
February 18, 2009. 

[8] Office of Management and Budget, "Updated Implementing Guidance 
for the American Recovery and Reinvestment Act of 2009," M-09-15, 
April 3, 2009. 

[9] Other exceptions to awarding government contracts using 
competitive procedures include: when competition would compromise 
national security; when an agency head determines competition is not 
in the public interest; when competition is precluded by the terms of 
an international agreement or a treaty between the United States and a 
foreign government or international organization; and to maintain a 
supplier base in case of a national emergency or to achieve industrial 
mobilization, to establish or maintain an essential engineering, 
research, or development capability, or to acquire the services of an 
expert or neutral person for any litigation or dispute. 

[10] Federal agencies may request that SBA allow them to make a 
competitive 8(a) award below the competitive threshold, but, per the 
FAR, such requests should be approved only on a limited basis. 

[11] Office of Management and Budget, M-09-10, February 18, 2009. 

[12] GAO, Recovery Act: As Initial Implementation Unfolds in States 
and Localities, Continued Attention to Accountability Issues Is 
Essential, [hyperlink, http://www.gao.gov/products/GAO-09-580] 
(Washington, D.C.: Apr. 23, 2009). 

[13] According to USACE officials, these timeframes generally pertain 
to construction contracts awarded for less than $3.5 million. 

[14] GAO has identified a number of issues associated with contracts 
awarded under the 8(a) program. GAO, Small Business Administration: 
Steps Have Been Taken to Improve Administration of the 8(a) Program, 
but Key Controls for Continued Eligibility Need Strengthening, 
[hyperlink, http://www.gao.gov/products/GAO-10-353] (Washington, D.C.: 
Mar. 30, 2010); 8(a) Program: Fourteen Ineligible Firms Received $325 
Million in Sole-Source and Set-Aside Contracts, [hyperlink, 
http://www.gao.gov/products/GAO-10-425] (Washington, D.C.: Mar. 30, 
2010); and Contract Management: Increased Use of Alaska Native 
Corporations' Special 8(a) Provisions Calls for Tailored Oversight, 
[hyperlink, http://www.gao.gov/products/GAO-06-399] (Washington, D.C.: 
Apr. 27, 2006). 

[15] The FAR does not require a documented justification for not 
competing contract actions under the 8(a) program or for certain 
contracts awarded using simplified acquisition procedures. 

[16] For more information about the Recovery Accountability and 
Transparency Board's coordination efforts for the IG community, see 
[hyperlink, http://www.gao.gov/products/GAO-10-604] and GAO, Recovery 
Act: One Year Later, States' and Localities' Uses of Funds and 
Opportunities to Strengthen Accountability, [hyperlink, 
http://www.gao.gov/products/GAO-10-437] (Washington, D.C.: Mar. 3, 
2010), and Recovery Act: Contract Oversight Activities of the Recovery 
Accountability and Transparency Board and Observations on Contract 
Spending in Selected States, [hyperlink, 
http://www.gao.gov/products/GAO-10-216R] (Washington, D.C.: Nov. 30, 
2009). 

[17] Office of Management and Budget, M-09-15. 

[18] Earned value management measures the value of work accomplished 
in a given period and compares it with the planned value of work 
scheduled for that period and with the actual cost of work 
accomplished. 

[19] Recovery Accountability and Transparency Board, Review of 
Contracts and Grants Workforce Staffing and Qualifications in Agencies 
Overseeing Recovery Act Funds (Washington, D.C., March 2010). 

[20] As of June 2010, HHS had obligated about $88 billion of Recovery 
Act funds, of which only $1.9 billion was for contracts. 

[21] See Small Business Administration, Office of Inspector General, 
SBA's Planning and Award of the Customer Relationship Management 
Contracts, ROM 10-16 (Washington, D.C., June 29, 2010). 

[22] [hyperlink, http://www.gao.gov/products/GAO-10-353]. 

[23] [hyperlink, http://www.gao.gov/products/GAO-10-425]. 

[24] [hyperlink, http://www.gao.gov/products/GAO-06-399]. 

[25] Air Force Audit Agency, American Recovery and Reinvestment Act of 
2009 Program Requirements, 3rd Wing, Elmendorf Air Force Base, AK, 
F2010-0022-FBN000 (Spanaway, WA: Dec. 10, 2009). 

[26] Small Business Administration, Office of Inspector General, 
Memorandum on the Adequacy of Procurement Staffing and Oversight of 
Contractors Supporting the Procurement Function, ROM-I0-13 
(Washington, D.C.: Apr. 9, 2010). 

[27] For the purposes of this report, we consider state-level 
oversight as centralized state government offices with purview over 
more than one state agency or department. This includes each 
governor's office and state controller offices. State agency-level 
oversight refers to an individual state agency that provides oversight 
of state activities under the purview of the state agency and possibly 
oversight over local government activities and entities receiving 
funds from that agency. We define local levels as local governments of 
the counties, cities, towns, or municipalities and other local 
governing entities, such as local education agencies and community 
action agencies. 

[28] The Recovery Act did not provide for or set aside funds that the 
states were to use to conduct oversight. However, subsequent to the 
passage of the Recovery Act, OMB issued OMB Memorandum M-09-18' 
"Payments to State Grantees for Administrative Costs of Recovery Act 
Activities," dated May 11, 2009, which provided flexibilities for 
states to use already existing procedures under an expedited process 
to recover administrative costs. The guidance was intended to help the 
states quickly and effectively build the necessary capacities to meet 
their responsibilities under the Recovery Act. Procedures for 
recovering costs were initially set out in OMB Circular A-87, Cost 
Principles for State, Local and Indian Tribal Government, dated August 
29, 1997. 

[29] We previously reported that the District of Columbia and the 16 
states for which GAO is monitoring Recovery Act issues are facing 
reduced staffing levels caused by budget challenges. See GAO-10-604. 

[30] For the purposes of this report, we define the state audit 
organizations to include each state's official audit entity, such as 
the auditor general or state auditor as well as state IG offices. Some 
states have both a state audit organization and agency IGs. For 
example, Florida has an Auditor General, who covers state and local 
government entities and agency IGs; whereas Texas has a State Auditor, 
who covers state agencies, and agency IGs. 

[31] The Single Audit Act requires states, local governments and 
nonprofit organizations expending over $500,000 in federal awards in a 
year to obtain an audit in accordance with requirements set forth in 
the act. The Single Audit is also known as the OMB A-133 audit. For 
the Single Audit, auditors identify the applicable federal programs, 
including "major programs," to be reviewed based on risk criteria, 
including minimum dollar thresholds. OMB has 14 requirements that 
generally are to be tested for each major federal program to opine on 
compliance and report on significant deficiencies in internal control 
over compliance with each applicable compliance requirement. 

[32] [hyperlink, http://www.gao.gov/products/GAO-10-604]. 

[33] FAR § 16.504 permits contracts that provide for an indefinite 
quantity, within stated limits, of supplies or services during a fixed 
period. Contracting officers may use an indefinite-quantity contract 
when the government cannot predetermine, above a specified minimum, 
the precise quantities of supplies or services that the government 
will require during the contract period, and it is inadvisable for the 
government to commit itself for more than a minimum quantity. 

[34] The remaining $4 billion of DOE Recovery Act funding was through 
credit subsidies. 

[35] Earned value management measures the value of work accomplished 
in a given period and compares it with the planned value of work 
scheduled for that period and with the actual cost of work 
accomplished. 

[36] FPDS-NG is a comprehensive, Web-based tool and database that 
functions as a clearinghouse of information for all federal contract 
actions, including non-competitive and competitive actions, exceeding 
the micropurchase threshold, which in most cases is $3,000. 

[37] Our previous work, as well as the work of the federal Acquisition 
Advisory Panel, has identified limitations in the accuracy and 
timeliness of data in FPDS-NG. Both GAO and the Acquisition Advisory 
Panel have reported that while FPDS-NG has been the primary 
governmentwide contracting database for capturing and reporting on 
various acquisition topics, such as agency contracting actions and 
procurement trends, it has had data quality issues over a number of 
years. While FPDS-NG data are useful for providing insight, they are 
not always accurate at the detailed level. However, no other viable 
alternative currently exists for obtaining governmentwide data on 
federal procurements. See [hyperlink, 
http://www.gao.gov/products/GAO-09-1032T] and [hyperlink, 
http://www.gao.gov/products/GAO-08-160]. 

[38] The data reported on www.Recovery.gov represent the data reported 
by recipients of Recovery Act funds within the states. Our previous 
work has identified concerns with the quality of these data; however, 
this Web site is the only source of data available on states' Recovery 
Act contracting awards. See [hyperlink, 
http://www.gao.gov/products/GAO-10-604]. 

[39] Recovery Act funds that were awarded directly to local 
governmental entities by federal agencies and bypassed state agencies 
were not included in the scope of our state-level work addressing 
oversight. These funds would include formula and discretionary grant 
programs. 

[End of section] 

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